Telegram

Financial Research

FSI Blast

FSI Blast

STRATEGY: Technology might have made its local low for 1H2021We are sending out this alert, because we believe there is a decent chance (51%) that the Technology sector made its local low for 1H2021. For context, as you know, we have been urging our clients to overweight Epicenter stocks in 2021, with a particular focus on Energy.  Energy has been our Strategy focus in 19 of our last 40 daily notes, so we have been urgent in wanting investors to have exposure.  Moreover, we have written about the crowding of Technology ownership and our general leeriness of Growth stocks. However, given today's carnage, following the Feb jobs report, the NASDAQ was >13% off its highs and Technology stocks were getting liquidated.  In fact, the super-growth ARKK ETF fund was down to a greater extent. This is what makes a local bottom.  We believe this is likely the 1H2021 low for Technology stocks and would be buyers. We could be wrong.  But check out some of these chartsOn the 30 minute chart, the S&P 500 Technology Sector registered what looks like a qualified 13 Buy countdown - DeMark is a counter-trading system so it means the price level at 13 is key- If Technology reverses here (higher), it is a sign that selling is doneSo far, so good Source: BloombergSame story with the ARKK ETF.  This ETF is holders of the growthiest and sizzliest of Tech. - down 33% in the past two weeks- see the qualified '13'? Source: BloombergBottom line: Technology sector local bottom -- but we like Epicenter and urge investors to get more Energy exposure So we think the selling of Technology, or at least the sloppy selling, is likely over.  We are only assigning 51% odds, since COVID-19 and bond markets are highly unpredictable. Technology companies are expected to prosper in 2021.  Fundamentals are good. We prefer Epicenter stocks, and Energy more.  But I think Technology stocks are due for a monster rally.

  • FSI Blast
Nov 19, 2020

COVID-19 UPDATE: Hmmm... looking more like cases could rolling over in TX, IL and WI...10 reasons S&P 500 P/E expands into YE --> thus, raising YE Target to 3,800 (vs 3,525 prior).

Click HERE to access the FSInsight COVID-19 Daily Chartbook. _________________________________ REGISTER NOW: Exclusive Virtual Conference on Post Election Roundup and Market Strategy TODAY (11/19) at 3 PM ET... Please join us for an exclusive virtual conference as the leading strategists at FSInisght provide their insights into where the markets are headed and how to position your portfolio in a post-election world. Details and SpecificsDate: Thursday, November 19th, 2020Time: 3:00PM - 6:00PM Eastern Time Link -->  Reserve your seat via this link Should you have any questions, please do not hesitate to leave us a message or email us at inquiry@fsinsight. com._________________________________ STRATEGY: Stocks are still a good risk/reward into YE, as P/E has tailwindsWe do not want to be jumping the gun but it does look more and more like COVID-19 wave 3 could be slowing.  Take a look at the chart below:- the 7D delta in daily cases has slowed markedly from >43,000 to <20,000- and daily cases in TX, IL and WI look to be rolling over (see Point #2)- is wave 3 peaking in the next few weeks?- this is way ahead of our base case of flu season lasting until mid-FebCOVID-19 is unpredictable.  So daily cases might be slowing in wave 3 states, but it could erupt in the Northeast.  So it might be more accurate to say daily cases seem to be rolling over in TX, WI, IL and leave it at that.  We wrote about El Paso and TX yesterday.  But it seems like it is more states now. Source: COVID-19 Tracking and Fundstrat  Given the fierce move by equities in the past few weeks, it is not entirely surprising to see stocks consolidate over the last few days.  And not surprisingly, there are more than a few who believe markets have become overly exuberant.  To an extent, we understand this, as there has been both a sizable move in markets coupled with a sizable rotation into epicenter stocks. That said, we see tailwinds for P/E into year-end, and while upside to earnings revisions is muted for now (we are done with 3Q2020 EPS), we believe risk premia can fall = P/E expansion.  Below are 10 reasons we see this: 1.  COVID-19 vaccine and therapeutics take “worst case” off table. 2.  Policymakers are pursuing soft-lockdowns, not killing recovery3.  Pent-up demand in US, look at output gap4.  China seeing massive explosive economic recovery5.  Fiscal stimulus coming6.  Investors are cautiously positioned, with little conviction7.  $4.5T cash on sidelines8.  If VIX breaks below 20, double-risk on signal9.  Santa Claus rally10. Fed dovish We see S&P 500 reaching 3,800 by year-end (vs 3.525 prior) as P/E expands by 1.4X to 19.7XWith tailwinds for P/E expansion, we see 2021 P/E rising to 19.7X from 18.3X, which would lead to S&P 500 3,800 (based on EPS of $193).  This, we are revising our YE target from 3,525 (which we raised on 8/13) and represents about 6.5% upside.- this is about the magnitude of a typical Santa Claus rally- so we are saying markets see their typical seasonal gains. Source: FundstratS&P 500 P/E of 19.7X is the same as High-yield implied P/E today... so it is not demandingFrom a valuation perspective, the target P/E of 19.7X is the same as the high-yield implied P/E (inverse of yield to worst) of 20.6X.   - in fact, it is a discount- if S&P 500 traded at 20.6X, the S&P 500 would be 3,976 Epicenter stocks rally still weaker than the post-Wave 1 rally... We have written multiple commentaries about the tailwinds for epicenter stocks, and in particular, how they are the most leveraged to both:- vaccine/therapeutics --> demand recovery- economic recovery --> operating leverage via cost cuttingThus, we see the best risk/reward in the epicenter.  And unlike earlier in 2020, there is much greater visibility and tangibility to a vaccine and cure for COVID-19.  Thus, the ability for markets to look beyond contemporaneous cases should be much higher.  As shown below, post-Wave 1, Epicenter stocks rallied 1,900bp relative to the S&P 500.  And the rally was weaker post-Wave 2.- So far, Epicenter has outperformed by 1,420bp.  - This is a fraction of the 7,000bp of YTD outperformance of Growth- Thus, we see substantial upside for epicenter stocks. Source: Fundstrat ADDENDUM: We are attaching the stock lists for our 3 portfolios:We get several requests to give the updated list for our stock portfolios.  We are including the links here: - Granny Shots  -->       core stocks, based on 6 thematic/tactical portfolios- Trifecta epicenter  --> based on the convergence of Quant (tireless Ken), Rauscher (Global strategy), Sluymer (Technicals)- Biden vs Trump  -->   based on correlation to either candidate odds Granny Shots:Full stock list here --> Click here Trifecta Epicenter:Full stock list here --> Click here Biden White House vs. Trump White House:Full stock list here --> Click here POINT 1: Daily cases 160,466, +19,492 vs 7D ago -- the lowest 7D delta in two weeksThe latest COVID-19 daily cases came in at 160,466, up +19,492 vs 7D ago. Wave 3 is still surging.- But oddly, are cases starting to decelerate on a rate of change basis?- maybe Source: COVID-19 Tracking Project  and Fundstrat7D delta at 19,492 is the lowest in nearly 3 weeks... Again, the daily change vs 7D ago, in our view, is the leading indicator as it is what influences the 7D moving average.- Daily cases are rising vs 7D ago,- It had been rising at >40,000 7D delta- But the pace slowed to <20,000 on Wednesday Source: COVID-19 Tracking and Fundstrat   Source: COVID-19 Tracking and Fundstrat   Source: COVID-19 Tracking and FundstratPOINT 2: If Wave 3 is peaking, early signs in WI, IL and TXYesterday, we wrote about how it looks like parts of Texas were seeing a peak in cases.  And below are the major states involved by their respective waves.  If wave 3 is peaking, we believe it is potentially starting in 3 states:- IL --> seems rolling over- TX --> we wrote yesterday about El Paso- WI --> squint... looks like it is rolling over Source: COVID-19 Tracking Project and FundstratThis is the chart showing daily cases per 1mm in the 6 largest counties in Texas.  And El Paso stands out because it looks like cases are finally rolling over. Source: Johns Hopkins and FundstratAgain, looking at Illinois, it does look like this surge associated with Wave 3 could be plateauing... that is a good sign. Source: Johns Hopkins and Fundstrat And again, I might say that Wisconsin also looks like daily cases are starting to roll over... Source: Johns Hopkins and Fundstrat  POINT 3: Age 60+ is now the largest share of new cases, a bad sign for future mortalityThe CDC provides data on demographic trends in COVID-19. The data is somewhat lagged, due to reported delays and the latest update is as of 11/3/2020, or about two weeks ago.  But the extracted data, particularly around the share of cases, is still relevant.  Below shows the share of cases  (trailing 30D) based on age groups.  This is important because we know of the sizable variances in mortality risk (case fatality rate) between age groups:- Wave 1, ~35% of cases were age 60+ which explains the extremely high mortality rates- Wave 2, the plurality of cases were age 20-29- Wave 3, so far, age 60+ is now the largest share of cases at ~21%This wave is underway, but this also suggests that death rates could exceed that of Wave 2, simply because of the higher share of older Americans. source:  chart below shows the case fatality rate by age, based on data from Our World in Data.  And as shown, there is a sharp rise in mortality based on age. the US specifically, Statista has this data, collected from the CDC and also shows considerably higher mortality for older Americans.- in round numbers, if wave 2 was primarily 20-29, the mortality rate (case fatality rate) was 0.1% but age 60+, this jumps to 2.7% or higher- thus, mortality risk remains high unless the standard of the case has improved /chart/21173/hospitalization-icu-admission-and-fatality-rates-for-reported-coronavirus-cases/RANDOM: Chart shows Wave 3 surge is similar to US corn production -- someone called it cornvirusI wanted to share this tweet from @EthicalSkeptic.  This account often comments on COVID-19 with sometimes interesting facets of the pandemic.  But this tweet below caught my eye.- @ethicalskeptic points out that corn production in the US looks similar to wave 3 of COVID-19- I especially found cornvirus to be funny Source: twitter. comThe two images below make it clearer.  I have no idea why these two charts look so similar.  If you have a view, please let me know Source: twitter. com

COVID-19 UPDATE: COVID-19 daily cases tracking sub-40,000 next week. Changing definition of Risk-off = now Technology + Healthcare, not the case since 2009

Click HERE to access the FSInsight COVID-19 Daily Chartbook. We are shifting to a 4-day a week publication schedule: MondayTuesdayWednesdaySKIP THURSDAYFriday STRATEGY: Risk-off now means Technology sells off, which was not the case since 2009COVID-19 data showing steady improvement, and now it is a matter of time before more states ease restrictions... While the move by Texas to fully lift COVID-19 related restrictions is not universally popular, the fact is, more states will be following it as we move through 2021.  After all, COVID-19 cases are showing consistent declines overall.  Take a look at the summary of the past week:- Daily cases    58,258 vs 70,010 7D ago, down -11,752- 7D positivity rate   4.9% vs 5.5% 7D ago- Hospitalized patients   44,172, down -16% vs 7D ago- Daily deaths    1,723, down -18% vs 7D agoVaccinations ramping steadily- avg 2.0 million daily this past week vs 1.9 million daily last week- overall, 8.3% have 2-doses, 16.2% 1-doseThese are all steadily improving figures.  And consider that about 14 million Americans are getting vaccinated every week, 50 million per month.  And with J&J soon supplying the third vaccine, these figures might jump to more than 20 million per week, or even 30 million.  At that pace, we should expect to see more states lifting restrictions.- that can only happen if daily cases continue to fall- daily cases are falling by >10,000 vs 7D ago, so it is a pretty impressive decline now- at this pace, we could see cases call to 30,000 by next week- and sub-25,000 before month end Source: COVID-19 Tracking and Fundstrat  STRATEGY: In 2021, risk-off now means sell Growth reversing the definition over the past 12 years...... Bond market still testing the FedStocks suffered further declines yesterday as interest rates surged higher yesterday, at 12pm ET, as Fed Chair Powell was speaking at a WSJ Forum.  The surge in interest rates in the past few weeks has alarmed investors, with the rise in rates reflecting a combination of rising inflation expectation (inflation breakevens showing this), stronger economic growth and the bond market pricing in Fed rate hikes sooner than policy guidance. Speaking with several credit and macro fund managers yesterday, several mentioned that one of the nuances from Fed chair's statements and comments was it seemed a small window is created for the Fed to be data dependent on its dovish policy stance -- and this small crack could lead to a broader data dependent stance -- and freeing rates to move higher and in some sense, allows the bond market to push the Fed in a direction. While I did not fully appreciate the nuances in these discussions, it seems that bond managers essentially said the Fed was mis-interpreted (data dependence) but this also means the Fed could easily fix this miscommunication -- in other words, there is not necessarily lasting damage.  Among the potential remedies, Fed could simply clarify its stance.  And if necessary take bolder steps like: (i) calendar guidance(no hike until this date), (ii) suggest something like Operation Twist (yield curve control) or (iii) extend maturities of its programs.  In short, the Fed is being tested but it is not out of policy tools. Source: Fundstrat and BloombergSTRATEGY: Changing the definition of Risk-off.  Now it means 3 sectors Technology, Healthcare and Discretionary (together 52% of market cap) leading downside in risk-off, no longer Cyclicals. Whenever interest rates surge or VIX surges, we know that hedge funds reduce leverage = risk-off.  But what is curious, is that risk-off for much of the past 12 years meant Cyclicals and weak sectors get sold.  And Defensive sector rally.  Well, since 2009, Defensive growth was essentially Technology stocks. This has not been the case in 2021.  Take a look at the table below, showing the relative return of sectors since Feb 16, 2021 (the S&P 500 recent high).  S&P 500 down 4.3% since 2/16- Energy       +11%- Financials    +3%- Industrial     +1%- Technology    -9%- Discretionary -9%- Healthcare    -5%This has become a tale of two markets, where Epicenter sectors, aka Cyclicals, are rallying.  But Growth and crowded trades are down.  This raises a question of whether rising rates is causing a risk-off.  After all, since 2009, I am used to seeing Cyclical stocks sell off hard when risk-off happens.  But it seems like it is now Growth sectors.  This could mean two things:- Growth is more sensitive to rising rates = true = hit harder by rising rates- Investors are trying to get out of Growth stocks and into Cyclicals = trueIn other words, the takeaway to me is that investors need to be adding to their Cyclical exposure.  These have held up far better than Growth stocks in this recent correction. Source: Fundstrat and BloombergDiscretionary is distorted by Amazon and Tesla, with both accounting for 40% of Discretionary market cap.  Hence, Discretionary is falling for the same reasons Technology is falling -- the sell-off in Growth stocks. - since the peak, the declines are 10% to 12% (the above table is based only on closing prices) Source: Fundstrat and BloombergEpicenter stocks have actually risen since 2/16/2021 (S&P 500 peak)And below, you can see the contrasting returns posted by Epicenter sectors.  Again, the standout is Energy, which is up 14% since 2/16/2021.  The fundamental and supply/demand outlook for Energy has become favorable in 2021, with oil prices showing considerable upside support.  So we do not see any reason these sectors will not continue to be steady. Source: Fundstrat and BloombergSTRATEGY:  7 reasons stocks are buy the dip even as the bond market is on edge ... We get the February jobs report on Friday.  And given the sensitivity of markets to higher interest rates, markets would prefer economic miss to the downside -- bad economic data reduces the risk of inflationary pressures.  And bad data means Fed has more reasons to stay dovish. But the larger story arc, in our view, is that equities have multiple positive supports and this constructive backdrop will likely dominate in 2021. More specifically, we see 7 positive supports for stocks in the near-term:1. Washington is moving forward with passing a large fiscal relief package, and Treasury Sec. Yellen has made a forceful case for it2. Fed has been vocal in policy stance (last week's minutes affirmed) and Fed is patient3. US economy is re-opening and economic momentum is strong -- so strong, JPMorgan's Chief Economist, Bruce Kasman, says US V-shape recovery will soon surpass China.  Wow.4.  There remains a substantial perception gap between policymakers/media and COVID-19 realized data, and a closing of this gap is positive for risk assets.5.  Millennials are steadily allocating assets toward equities, and the surge in retail brokerage account openings is evidence of this.6.  Bonds are becoming less attractive total return vehicles as inflationary expectation are increasing, boosting the attractiveness of equities7.  VIX should ultimately steadily decline in 2021, and as we pointed out in our 2021 Outlook, periods of declining volatility historically lead to big equity gains, particularly for cyclicals. STRATEGY: 25 Power Epicenter Trifecta stock ideas (*)We are introducing a Power Epicenter Trifecta stock list.  This is designed to identify the strongest stocks within our Trifecta epicenter stock list. We essentially added a power rating to the stocks in the trifecta list to find stocks with the strongest price appreciation potential. Thus, the criteria for the Power Epicenter Trifecta is:Positive views  (i) Quant (tireless Ken),                        (ii) Global Portfolio Strategy (Brian Rauscher, aka Rocky) and                       (iii) Technicals. Plus strong power rating:                        (i) trailing 1M return > 12M return                        (ii) outperformed S&P 500 past 6M (iii) price > 20D MAVG (iv) price > 50D MAVG Consumer Discretionary:RL, NCLH, RCLFinancials:PBCT, NYCBIndustrials:NVT, DAL, KEXEnergy:XOM, HP, NOV, SLB, COP, EOG, MRO, MUR, HFC, PSXReal Estate:BXP, HIW, UDR, KIM, WRI, VNO, JBGS (*) the 25 Power Epicenter Trifecta stock ideas are the subset of the original 121 Epicenter Trifecta stock list. For the full list of our original Epicenter Trifecta stock list, please click the link below. Please note that the stocks rated OW on this list meet the requirements of our investment theme as of the publication date. We do not monitor this list day by day. A stock taken off this list means it no longer meets our investment criteria, but not necessarily that it is neutral rated or should be sold. Please consult your financial advisor to discuss your risk tolerance and other factors that characterize your unique investment profile. For the full list of the 121 Epicenter Trifecta stock ideas, please Click Here. ADDENDUM: We are attaching the stock lists for our 3 portfolios:We get several requests to give the updated list for our stock portfolios.  We are including the links here: - Granny Shots  -->       core stocks, based on 6 thematic/tactical portfolios- Trifecta epicenter  --> based on the convergence of Quant (tireless Ken), Rauscher (Global strategy), Technicals- Violence in USA --> companies that are involved in some aspect of home or personal security. We are not recommending these stocks, but rather, bringing these stocks to your attention. Granny Shots:Full stock list here --> Click hereTickers: AAPL, CSCO, INTC, MXIM, NVDA, EBAY, KLAC, GRMN, GOOG, MNST, MSFT, AMZN, QCOM, TSLA, PYPL, AXP, BF/B, PM, XLNX, TGT, PG, XOM, VLO, GL, RF, ATVI, BBY, GE, AMAT, LRCX, MU, HPQ Trifecta Epicenter (*):Full stock list here --> Click hereTickers: AN, GM, F, GRMN, LEG, TPX, TOL, NWL, MAT, PII, RL, MGM, HLT, MAR, NCLH, RCL, WH, TNL, SIX, DRI, SBUX, FL, GPS, KSS, LB, VFC, FITB, WTFC, ASB, BOH, FHN, FNB, PB, PBCT, RF, STL, TFC, WBS, PNFP, PACW, SBNY, NYCB, MTG, EVR, GS, IBKR, VIRT, BK, STT, SYF, BHF, AGCO, OC, ACM, WAB, EMR, GNRC, NVT, CSL, GE, IEX, PNR, CFX, DOV, MIDD, SNA, XYL, FLS, EAF, TTC, ITT, ALK, DAL, JBLU, LUV, MIC, KEX, UNP, JBHT, R, UBER, UHAL, LSTR, MAN, XOM, HP, BKR, HAL, NOV, SLB, COP, EOG, FANG, HES, MRO, MUR, PXD, XEC, HFC, MPC, PSX, LYB, EXP, MLM, CF, MOS, ESI, NEU, NUE, RS, SON, IP, BXP, HIW, UDR, KIM, NNN, WRI, VNO, JBGS, RYNViolence in USA:Full stock list here --> Click here (*) Please note that the stocks rated OW on this list meet the requirements of our investment theme as of the publication date. We do not monitor this list day by day. A stock taken off this list means it no longer meets our investment criteria, but not necessarily that it is neutral rated or should be sold. Please consult your financial advisor to discuss your risk tolerance and other factors that characterize your unique investment profile. POINT 1: Daily COVID-19 cases 58,258, -11,752 vs 7D ago..._____________________________Current Trends -- COVID-19 cases: - Daily cases    58,258 vs 70,010 7D ago, down -11,752- 7D positivity rate   4.9% vs 5.5% 7D ago- Hospitalized patients   44,172, down -16% vs 7D ago- Daily deaths    1,723, down -18% vs 7D ago_____________________________- The latest COVID-19 daily cases came in at 58,258, down -11,752 vs 7D ago.  - After being positive for three days last week, the 7D delta in daily cases has turned negative again. This shows the rise in daily cases last week could just be the results of the distortion of test/case data due to the cold snap.- The 7D delta in daily cases now is accelerating to the downside, and US COVID-19 cases are on the track for sub-40,000 later this week or early next week. Source: COVID-19 Tracking Project  and Fundstrat7D delta in daily cases turns negative for 7 consecutive days and accelerates to the downside... After being positive for three days last week, the 7D delta in daily cases has turned negative again. This is good news - it shows the rise in daily cases last week could just be the results of the distortion of test/case data due to the cold snap, and the daily cases in the US are still falling.   Source: COVID-19 Tracking and Fundstrat  US hospitalization still rolling over ... and even US deaths seem to be rolling over... Below we show the aggregate patients who are currently hospitalized due to COVID. It has fallen significantly from the wave 3 peak. Source: COVID Tracking Project and Fundstrat Source: COVID Tracking Project and Fundstrat Source: COVID-19 Tracking and Fundstrat   Source: COVID-19 Tracking and Fundstrat   POINT 2: VACCINE: 9 states (+2 vs Friday) near ~60% infected + vaccinated_____________________________Current Trends -- Vaccinations: Vaccinations ramping steadily- avg 2.0 million this past week vs 1.9 million last week- overall, 8.3% have 2-doses, 16.2% 1-dose_____________________________Vaccination frontier update --> 9 states > 60% combined penetration (vaccines + infections)Below we sorted the states by the combined penetration (vaccinations + infections).  As we commented in the past, the key figure is the combined value >60%, which is presumably near herd immunity.  That is, the combined value of infections + vaccinations as % population > 60%.- Currently, ND + SD + RI + AZ + OK + UT + TN + NM + NE are basically all at this level- So slowly, the US is getting to that threshold of presumable herd immunity Source: CDC, COVID Tracking Project and FundstratThere was a total of 1,691,492 doses administered on Thursday, slightly down from 1,804,667 doses 7D ago. However, the pace overall is steadily rising, as evidenced by the 7D moving average (see blue line). Source: CDC, COVID-19 Tracking Project and Fundstrat ~80% of the US has seen 1-dose penetration >15%... still not wide geographyTo better illustrate the actual footprint of the US vaccination effort, we have a time series showing the percent of the US with 2-doses covering at least 5% (and 10%) of its residents, displayed as the orange line on the chart. Currently, all US states have seen 5% of their residents with 2-doses administered.   However, when looking at the percentage of the US with 2-doses covering at least 10% of its residents, this figure is only 3.6%.- While all US states have seen vaccine penetration >10%, 80% of them have seen 1 dose penetration >15%.- All of the US has at least 5% of its residents with the full 2 doses, However, only 3.6% of US has 2-dose vaccinated >10%- This is still a small figure (5%/10% of residents with 2 doses) but this figure is rising sharply now- the takeaway is the vaccination efforts are unlikely to be having much of an effect on case figures, currently Source: CDC, COVID-19 Tracking Project and Fundstrat This is the state by state data below, showing information for states with one dose and for those with two doses. Source: CDC, COVID-19 Tracking Project and Fundstrat The ratio of vaccinations/ daily confirmed cases is generally trending higher (red line is 7D moving avg) and this is the most encouraging statistic. - the 7D moving average is about ~30 for the past few days- this means 30 vaccines dosed for every 1 confirmed caseThis figure is rising nicely and likely surges in the coming weeks Source: CDC, COVID-19 Tracking Project and FundstratIn total, about 54 million Americans have received at least 1 dose of a vaccine.  This is a good pace and as we noted previously, implies 30% of the population by April.   Source: CDC and Fundstrat

COVID-19 UPDATE: Daily cases resuming acceleration to downside. Remember, in a post-war economy, cyclicals become the new “growth” stocks

Click HERE to access the FSInsight COVID-19 Daily Chartbook. We are shifting to a 4-day a week publication schedule: MondayTuesdayWednesdaySKIP THURSDAYFriday STRATEGY: Leadership in 2021 is starting to look like it has legsCOVID-19 progress --> White House accelerates supply to May + Texas re-opens completely... On the COVID-19 front, there are really two key headlines in the past 24 hours:- White House accelerates forward vaccine supply to supply all adults by May, enlisting the aid of Merck to boost production- Texas re-opens economy completelyThere has been quite a lot of moving forward in the past few weeks.  COVID-19 cases are trending definitively lower, even as variants remain a worry.  And the US has been steadily improving vaccine supply. The Biden Administration is invoking the Defense Production Act to boost the J&J vaccine production, which received the EUA (emergency use authorization) in the past week.  Merck and J&J will work together to boost production.- unequivocally good news- nothing to quibble (unless someone is an mRNA avid fan) Source: /sections/coronavirus-live-updates/2021/03/02/973030394/biden-says-u-s-will-have-vaccine-supply-for-all-adults-by-may-prioritizes-teacheVaccine penetration might be contributing to the acceleration downwards of daily cases... On that note, it certainly seems like the vaccinations might be contributing to a renewed downward acceleration of cases.  The chart below is 7D delta of daily COVID-19 cases and as you can see, it has accelerated to the downside in the past few days. Source: COVID-19 Tracking and Fundstrat  And the other news is Texas is re-opening its economy fully as the Texas Governor, Greg Abbott, issued an Executive Order, ending all restrictions. Source: -telegram. com/news/coronavirus/article249627903. htmlAs far as COVID-19 case metrics, the charts below plot the case trends for the state of Texas.  And as you can see, the metrics have all been moving in the right direction.  Even daily cases are down 73% from their highs of >25,000 per day to ~5,000 per day.  This is not as steep as the declines seen by states >60% combined vaccinations + infections.  But still, not bad. We estimate that Texas has only ~44% combined vaccination + infections, below the 60% seen in herd immunity statesWe have been using the 60% threshold, based upon the combined infections + vaccinations, as the level where we might expect to see early signs of herd immunity.  And indeed, in the 5 states above that level, daily cases are collapsing. Our data science team, led by tireless Ken (and Jax) did the same calculations for Texas and for the 5 largest counties in the state.  And as shown below, you can see this figure is below 60%:- Texas overall estimated 44% (infection 32% + 13% vaccinated)- 5 largest counties similar (see below) Source: Fundstrat, Johns Hopkins and CDCSTRATEGY: A very different leadership is emerging in 2021 so far... and it arguably has legsWe are only two months into 2021, but the leadership YTD is very different from what most investors are accustomed to.  Granted, the leadership in 2021 so far looks like a continuation of the leadership since mid-2020:- Asia is leading --> China + Korea + Japan- Small-caps + mid-caps crushing large-caps- Value is beating Growth- Sector leadership is Cyclical, especially Energy + FinancialsThe above 4 factors are the complete opposite of the story for the prior 2 years and even prior 5 years, or prior decade. The leadership we are seeing in 2021 is really the opposite of what most of the institutional investor universe has seen work. In fact, take a look at the style boxes below and you can see the abrupt shift in leadership since mid-2020.  Again, to reiterate, the stuff that worked for the past decade has not been leading since mid-2020. Source: FundstratSTRATEGY: Leadership in 2021 is starting to look like it has legsWith this as context, over the past few weeks, one of the most common perspectives, in our many conversations with institutional investors, is when will this Cyclical-led rally end?- logically, our institutional investor clients believe Growth stocks are the most attractive over the long run.- after all, price appreciation is gains achieved by E (grow EPS) and PE (P/E up).- so buying companies focused on large addressable markets (TAM) + durable advantage = winning stocks. This makes sense to me.  For more than 15 of my 28 years of investment experience, I was an equity research analyst covering the wireless industry.  That sector grew from 34 million subs (in 1993) to ~5 billion today, so my career was built covering Growth stocks and believing in the power of durable advantage and large TAM. But COVID-19 Pandemic is a global war, and the post-war period is creating an entirely new economy... But there is something that is different, in our view, about the Global Depression of 2020.  Consider what happened in 2020 that did not happen in any recession in our lifetime, or 5 lifetimes:- Global economy shutdown in a synchronized manner- Shelter in place orders in place for >12 months (largely)- Global borders have been largely shut for >12 months in a way not seen anytime except wartime- Unemployment rates surged to levels not seen since the Great Depression2020 was no ordinary recession.  It was a full blown Depression, and one that forced every single company to rethink:- their business,- their customer relationships,- their business processes,- and their staffing requirements.- true for every business, large or small  So, this is what we can easily forget as the US economy starts to approach a return to normalcy. STRATEGY: Post-war rebuild means Cyclical companies are the new “growth stocks”So the world is emerging as a post-war economy. And the need to rebuild and reconnect is creating growth opportunities for cyclical companies. Think about it.  After any war, cyclical companies become growth companies as economies are rebuilt. This is why cyclicals, in our view, are taking leadership. If the above statement is true, then investors need to realize that many Cyclical companies are re-inventing themselves.  Not all, but many.  And these are about to re-engage with their customers.  And in this context, we think this is contributing to the confusing sector leadership:- business cycle is not in sequence, due to the global nature of the pandemic- sectoral leadership, therefore, will not follow the typical cycle (see below). As shown below, it is not really normal to see Energy + Financials lead at the same time.  Energy tends to be a late-cycle sector, while Financials are early sector.- but both can outperform in reflationary conditionsBut in summary, we think investors should look at the message from markets, rather than try to force an overlay on the market.  The equity markets are showing a very different type of leadership in 2021. And as we noted above, we think many Cyclical stocks are poised to surprise investors with improved business models. Bottom line --> We are still buying Epicenter stocks. Source: FundstratSTRATEGY: Rationale for why investors need to increase their exposure to Epicenter... When looking at this positioning data, one can really get the sense that Energy is a completely orphaned sector.  Hence, the rise in Energy stocks, we believe, is eventually going to create FOMO. We continue to urge investors to increase their exposure to Epicenter and reduce Growth. One thing to keep in mind is that as the economy re-opens, investors and customers are going to be living a very different experience.  Consider some future anecdotes we might see by Summer 2021:What will be thinking?- Theme parks are booming, I am going to buy Netflix? Nope- People are back at the gym, I am going to buy Peloton? Nope- I am taking my first trip in a year, I am going to buy Zoom? NopeSo you can see, there will be a shift in the mindset of both customers and investors are we move through mid-year and it will show up as consumer wallet change and in equity investor decisions.- Notably, take note below. - Energy is up 31% YTD, yet, hardly anyone is talking about Energy Source: Fundstrat and Bloomberg STRATEGY: Epicenter Trifecta List 121 stocks (*)The case for being Cyclically-tilted is strengthening:- Vaccine rollout set to accelerate- US cases collapsing- US economy set to re-open- US corporates reset cost structures = strong operating leverage- US credit markets strong = cost of capital fallingBelow is our updated Trifecta epicenter stock list. These are the stocks which were hit the hardest by the pandemic and have the greatest operating leverage to a re-opening.  And we like the earnings upside in these stocks, because of the massive cost reset.  The stocks are based on positive views coming from the trifecta of: (i) Quant (tireless Ken), (ii) Global Portfolio Strategy (Brian Rauscher, aka Rocky) and (iii) Technicals.  Consumer Discretionary:AN, GM, F, GRMN, LEG, TPX, TOL, NWL, MAT, PII, RL, MGM, HLT, MAR, NCLH, RCL, WH, TNL, SIX, DRI, SBUX, FL, GPS, KSS, LB, VFCFinancials:FITB, WTFC, ASB, BOH, FHN, FNB, PB, PBCT, RF, STL, TFC, WBS, PNFP, PACW, SBNY, NYCB, MTG, EVR, GS, IBKR, VIRT, BK, STT, SYF, BHFIndustrials:AGCO, OC, ACM, WAB, EMR, GNRC, NVT, CSL, GE, IEX, PNR, CFX, DOV, MIDD, SNA, XYL, FLS, EAF, TTC, ITT, ALK, DAL, JBLU, LUV, MIC, KEX, UNP, JBHT, R, UBER, UHAL, LSTR, MANEnergy:XOM, HP, BKR, HAL, NOV, SLB, COP, EOG, FANG, HES, MRO, MUR, PXD, XEC, HFC, MPC, PSXBasic Materials:LYB, EXP, MLM, CF, MOS, ESI, NEU, NUE, RS, SON, IPReal Estate:BXP, HIW, UDR, KIM, NNN, WRI, VNO, JBGS, RYN Source: Fundstrat, Bloomberg(*) Please note that the stocks rated OW on this list meet the requirements of our investment theme as of the publication date. We do not monitor this list day by day. A stock taken off this list means it no longer meets our investment criteria, but not necessarily that it is neutral rated or should be sold. Please consult your financial advisor to discuss your risk tolerance and other factors that characterize your unique investment profile. ADDENDUM: We are attaching the stock lists for our 3 portfolios:We get several requests to give the updated list for our stock portfolios.  We are including the links here: - Granny Shots  -->       core stocks, based on 6 thematic/tactical portfolios- Trifecta epicenter  --> based on the convergence of Quant (tireless Ken), Rauscher (Global strategy), Technicals- Violence in USA --> companies that are involved in some aspect of home or personal security. We are not recommending these stocks, but rather, bringing these stocks to your attention. Granny Shots:Full stock list here --> Click hereTickers: AAPL, CSCO, INTC, MXIM, NVDA, EBAY, KLAC, GRMN, GOOG, MNST, MSFT, AMZN, QCOM, TSLA, PYPL, AXP, BF/B, PM, XLNX, TGT, PG, XOM, VLO, GL, RF, ATVI, BBY, GE, AMAT, LRCX, MU, HPQ Trifecta Epicenter (*):Full stock list here --> Click hereTickers: AN, GM, F, GRMN, LEG, TPX, TOL, NWL, MAT, PII, RL, MGM, HLT, MAR, NCLH, RCL, WH, TNL, SIX, DRI, SBUX, FL, GPS, KSS, LB, VFC, FITB, WTFC, ASB, BOH, FHN, FNB, PB, PBCT, RF, STL, TFC, WBS, PNFP, PACW, SBNY, NYCB, MTG, EVR, GS, IBKR, VIRT, BK, STT, SYF, BHF, AGCO, OC, ACM, WAB, EMR, GNRC, NVT, CSL, GE, IEX, PNR, CFX, DOV, MIDD, SNA, XYL, FLS, EAF, TTC, ITT, ALK, DAL, JBLU, LUV, MIC, KEX, UNP, JBHT, R, UBER, UHAL, LSTR, MAN, XOM, HP, BKR, HAL, NOV, SLB, COP, EOG, FANG, HES, MRO, MUR, PXD, XEC, HFC, MPC, PSX, LYB, EXP, MLM, CF, MOS, ESI, NEU, NUE, RS, SON, IP, BXP, HIW, UDR, KIM, NNN, WRI, VNO, JBGS, RYNViolence in USA:Full stock list here --> Click here (*) Please note that the stocks rated OW on this list meet the requirements of our investment theme as of the publication date. We do not monitor this list day by day. A stock taken off this list means it no longer meets our investment criteria, but not necessarily that it is neutral rated or should be sold. Please consult your financial advisor to discuss your risk tolerance and other factors that characterize your unique investment profile. POINT 1: Daily COVID-19 cases 50,568, -10,262 vs 7D ago... 7D delta in daily cases accelerate to the downside..._____________________________Current Trends -- COVID-19 cases: - Daily cases    50,568 vs 60,830 7D ago, down -10,262- 7D positivity rate   4.9% vs 5.7% 7D ago- Hospitalized patients   46,388, down -16% vs 7D ago- Daily deaths    1,942, down -4.0% vs 7D ago_____________________________- The latest COVID-19 daily cases came in at 50,568, down -10,262 vs 7D ago.  - After being positive for three days last week, the 7D delta in daily cases has turned negative again. This shows the rise in daily cases last week could just be the results of the distortion of test/case data due to the cold snap.- The 7D delta in daily cases now is accelerating to the downside, and US COVID-19 cases are on the track for sub-40,000 later this week or early next week. Source: COVID-19 Tracking Project  and Fundstrat7D delta in daily cases turns negative for 5 consecutive days and accelerates to the downside... After being positive for three days last week, the 7D delta in daily cases has turned negative again. This is good news - it shows the rise in daily cases last week could just be the results of the distortion of test/case data due to the cold snap and the daily cases in the US are still falling.    Source: COVID-19 Tracking and Fundstrat  US hospitalization still rolling over ... and even US deaths seem to be rolling over... Below we show the aggregate patients who are currently hospitalized due to COVID. It has fallen significantly from the wave 3 peak. Source: COVID Tracking Project and Fundstrat Source: COVID Tracking Project and Fundstrat Source: COVID-19 Tracking and Fundstrat  Source: COVID-19 Tracking and Fundstrat   POINT 2: VACCINE: 9 states (+2 vs Friday) near ~60% infected + vaccinated_____________________________Current Trends -- Vaccinations: Vaccinations ramping steadily- avg 1.9 million this past week vs 1.8 million last week- overall, 7.8% have 2-doses, 15.5% 1-dose_____________________________Vaccination frontier update --> 9 states > 60% combined penetration (vaccines + infections)Below we sorted the states by the combined penetration (vaccinations + infections).  As we commented in the past, the key figure is the combined value >60%, which is presumably near herd immunity.  That is, the combined value of infections + vaccinations as % population > 60%.- Currently, only ND + SD + RI + AZ + OK + UT + TN + NM + NE are basically all at this level- So slowly, the US is getting to that threshold of presumable herd immunity Source: CDC, COVID Tracking Project and FundstratThere was a total of 1,730,603 doses administered on Tuesday, up from 853,143 7D ago. Overall, the pace is steadily rising, as evidenced by the 7D moving average (see blue line). Source: CDC, COVID-19 Tracking Project and Fundstrat ~60% of the US has seen 1-dose penetration >15%... still not wide geographyTo better illustrate the actual footprint of the US vaccination effort, we have a time series showing the percent of the US with 2-doses covering at least 5% (and 10%) of its residents, displayed as the orange line on the chart. Currently, all US states have seen 5% of their residents with 2-doses administered.   However, when looking at the percentage of the US with 2-doses covering at least 10% of its residents, this figure is only 3.6%.- While all US states have seen vaccine penetration >10%, 63% of them have seen 1 dose penetration >15%. Not a lot of geography.- All of the US has at least 5% of its residents with the full 2 doses, However, only 3.6% of US has 2-dose vaccinated >10%- This is still a small figure (5%/10% of residents with 2 doses) but this figure is rising sharply now- the takeaway is the vaccination efforts are unlikely to be having much of an effect on case figures, currently Source: CDC, COVID-19 Tracking Project and Fundstrat This is the state by state data below, showing information for states with one dose and for those with two doses. Source: CDC, COVID-19 Tracking Project and Fundstrat The ratio of vaccinations/ daily confirmed cases is generally trending higher (red line is 7D moving avg) and this is the most encouraging statistic. - the 7D moving average is about ~30 for the past few days- this means 30 vaccines dosed for every 1 confirmed caseThis figure is rising nicely and likely surges in the coming weeks Source: CDC, COVID-19 Tracking Project and FundstratIn total, about 51 million Americans have received at least 1 dose of a vaccine.  This is a good pace and as we noted previously, implies 30% of the population by April.   Source: CDC and FundstratPOINT 3: Texas Gov ends all COVID-19 restrictionsTexas Governor, Greg Abbott, issued an Executive Order ending all COVID-19 restrictions... On Tuesday, the Governor of Texas, Greg Abbott, issued an Executive Order, ending all restrictions related to COVID-19.  The rationale for this action is the drop in COVID-19 cases along with the rise in the number of Texans receiving the vaccination.- Vaccine distribution has been pretty wide in the state- My friends in Texas have told me there is plenty of access to vaccinations, for those seeking vaccinations. Source: TX Governor's OfficeTexas cases are down 73% from its peak, not as impressive as the 95%-ish seen by North Dakota or South Dakota... As far as COVID-19 case metrics, the charts below plot the case trends for the state.  And as you can see, the metrics have all been moving in the right direction.  Even daily cases are down 73% from their highs of >25,000 per day to ~5,000 per day.  This is not as steep as the declines seen by states >60% combined vaccinations + infections.  But still, not bad. We estimate that Texas has only ~44% combined vaccination + infections, below the 60% seen in herd immunity statesWe have been using the 60% threshold, based upon the combined infections + vaccinations, as the level where we might expect to see early signs of herd immunity.  And indeed, in the 5 states above that level, daily cases are collapsing. Our data science team, led by tireless Ken (and Jax) did the same calculations for Texas and for the 5 largest counties in the state.  And as shown below, you can see this figure is below 60%:- Texas overall estimated 44% (infection 32% + 13% vaccinated)- 5 largest counties similar (see below) Source: Fundstrat, Johns Hopkins and CDC

COVID-19 UPDATE: US COVID-19 cases tracking for sub-40,000 this week while 5 states show evidence of "herd immunity". Global Strategist Rauscher upgrades Energy to OW, supporting fundamental EPS revisions underway

Click HERE to access the FSInsight COVID-19 Daily Chartbook. We are shifting to a 4-day a week publication schedule: MondayTuesdayWednesdaySKIP THURSDAYFriday STRATEGY: Equities post largest 1D % gain since Nov election, while VIX falls + bonds rally = boomUS daily cases are falling again and on track for sub-40,000 this week... yayIt looks like the downturn in US COVID-19 cases is resuming.  There was a mini-scare last week as cases turned up, but our lead data scientist, tireless Ken, noted that the cold weather likely artificially suppressed testing and the surge last week was merely a true up -- looks like he was correct.  The downturn in cases resumes.- tracking for sub 40,000 this week- tracking for sub 25,000 mid-March- if USA matches 5 states with something akin to herd immunity cases <15,000 by end of MarchWhoa. Source: COVID-19 Tracking Project  and FundstratWatch those states with >60% combined infections + vaccinations... For some time, we have pointed how important it is to watch states with combined vaccinations + infections >60%.  For a long time, it was just North Dakota and South Dakota.  The reason being that if there is something akin to herd immunity, the case trends in these states should become extremely favorable. Per data by tireless Ken, there are now 5 states where the combined figure is solidly >60%:- South Dakota    +72%- North Dakota    +71%- Rhode Island     +66%- Arizona              +62%- Oklahoma         +61%So, given the continuous vaccination and improving rate, more states are crossing over 60%. Source: CDC, COVID Tracking Project and FundstratUtter collapse in daily cases taking place in these 5 states... The daily case figures are showing an utter collapse of COVID in these states.  Take a look below at the 7D moving average:- South Dakota    -89%- North Dakota     -95%- Rhode Island     -81%- Arizona              -87%- Oklahoma         -83%Recall how these states were suffering catastrophic hospitalization and deaths and soaring case figures.  But as vaccination penetration has surged, cases are collapsing. - Consider this, if the USA figures matched the improvement of North Dakota, the US would only be reporting 15,000 cases per day- Get the picture?  If the vaccination efforts remain effective, we could see dramatic improvements in coming weeks STRATEGY: Equities post largest 1D % gain since November 2020 elections and prior to that... March 2020 bottom... Equities posted staggering gains on Monday:- DJIA                      +1.98%- S&P 500                +2.38%- Nasdaq                 +3.00%- Russell 2000         +3.60%- Russell Microcap  +4.80%So, the rally was strong across the board, but particularly strong for riskier equities -- a classic risk-on sign.  But there were multiple reasons to respect these gains:- equities posted largest 1D gain since Nov 3, 2020 (below)- VIX -16% to 23, down -4.6 and -26% from the 31 on 2/25/2021- 10-yr interest rates backing off from 1.6% on 2/25/2021- US economic data was very good, Feb ISM 60.8 vs 58.7 in Jan, construction spending +1.7% MoMSo, this was not necessarily a dead-cat bounce.  In fact, take a look at the chart below.  We have only seen similar 1D % gains twice in the past year.  There was a cluster after:- Nov 3, 2020 elections, the start of an 18% rally- March 2020 bottom, the start of a +50% rallyHmmm.... so in the past year, after an extended sell-off, a major 1D price gain, coupled with strong positive market breadth is a signal of a rally.  This has been the case and, in our view, a decent framework for what to expect.  In other words, we think this signals further gains ahead - potentially strong gains. Source: Fundstrat and BloombergBond VIX last week also signaled an equity bottom was imminent... Last Thursday evening (Friday AM), our data science team pointed out that the near record surge in bond volatility (CBOE Bond VIX) was the 4th such spike in the past decade. And importantly, the 3 prior times of such a Bond VIX spike, where the rate of change (ROC) surged like it did, have been signs of a contemporaneous stock market low. We highlighted the 4 instances where the Bond VIX spiked + ROC soared >20:- June 24, 2013- October 15, 2014- March 19, 2020Yes, 3 of 3 times previously, it was a major stock market bottom.  Nearly to the day.  Although on March 19th, it was 1-day before the bottom. Source: Fundstrat and BloombergThis is what we showed last week, for the 3 precedent instances:- June 24, 2013, S&P 500 bottomed to the day- October 15, 2014, S&P 500 bottomed to the day- March 19, 2020,  S&P 500 bottomed to the dayNotice a pattern here? And now it looks like this 4th instance was also the local bottom. Source: Fundstrat and BloombergSTRATEGY: Fundstrat Global Portfolio Strategist, Brian Rauscher, upgrades view on Energy... affirming Energy MUST BE OWNEDOur Head of Global Portfolio Strategy, Brian Rauscher, has raised his outlook for Energy to Outperform - low from Neutral.  Brian, formerly the investment strategist at hedge fund Fortress Investments, manages a proven sector selection and stock selection model.  Many of our clients use it profitably.  And over the past few months, his model has advocated a shift towards an overweight in Energy:- foremost, his 8-panel model is no longer negative on Energy- additionally, the macro backdrop is stronger- Rauscher's model tracks global EPS and sales revisions very closelyHence, the fact that his model is turning favorable on Energy lends further fundamental credibility to Energy's strength.  While I don't want to speak for his model, rate of change is what is key.  And as legendary investor Tom Luddy, formerly vice chairman of JPMorgan, famously says:- less bad, is positive change, hence less bad is goodThat is exactly what supports, in our view, our continued confidence in the upside for Energy stocks.  Recall, based upon $60 crude, XLE and OIH, the proxies for Energy and Oilfield services, has 40% and 90% upside from current levels.  Thus, we urge clients to overweight this sector, in a BIG WAY. Source: FundstratSTRATEGY: Rationale for why investors need to increase their exposure to Epicenter... When looking at this positioning data, one can really get the sense that Energy is a completely orphaned sector.  Hence, the rise in Energy stocks, we believe, is eventually going to create FOMO. We continue to urge investors to increase their exposure to Epicenter and reduce Growth. One thing to keep in mind is that as the economy re-opens, investors and customers are going to be living a very different experience.  Consider some future anecdotes we might see by Summer 2021:What will be thinking?- Theme parks are booming, I am going to buy Netflix? Nope- People are back at the gym, I am going to buy Peloton? Nope- I am taking my first trip in a year, I am going to buy Zoom? NopeSo you can see, there will be a shift in the mindset of both customers and investors as we move through mid-year and it will show up as consumer wallet change and in equity investor decisions.- Notably, take note below. - Energy is up 31% YTD, yet hardly anyone is talking about Energy Source: Fundstrat and Bloomberg STRATEGY: Epicenter Trifecta List 121 stocks (*)The case for being Cyclically-tilted is strengthening:- Vaccine rollout set to accelerate- US cases collapsing- US economy set to re-open- US corporates reset cost structures = strong operating leverage- US credit markets strong = cost of capital fallingBelow is our updated Trifecta epicenter stock list. These are the stocks which were hit the hardest by the pandemic and have the greatest operating leverage to a re-opening.  And we like the earnings upside in these stocks, because of the massive cost reset.  The stocks are based on positive views coming from the trifecta of: (i) Quant (tireless Ken), (ii) Global Portfolio Strategy (Brian Rauscher, aka Rocky) and (iii) Technicals.  Consumer Discretionary:AN, GM, F, GRMN, LEG, TPX, TOL, NWL, MAT, PII, RL, MGM, HLT, MAR, NCLH, RCL, WH, TNL, SIX, DRI, SBUX, FL, GPS, KSS, LB, VFCFinancials:FITB, WTFC, ASB, BOH, FHN, FNB, PB, PBCT, RF, STL, TFC, WBS, PNFP, PACW, SBNY, NYCB, MTG, EVR, GS, IBKR, VIRT, BK, STT, SYF, BHFIndustrials:AGCO, OC, ACM, WAB, EMR, GNRC, NVT, CSL, GE, IEX, PNR, CFX, DOV, MIDD, SNA, XYL, FLS, EAF, TTC, ITT, ALK, DAL, JBLU, LUV, MIC, KEX, UNP, JBHT, R, UBER, UHAL, LSTR, MANEnergy:XOM, HP, BKR, HAL, NOV, SLB, COP, EOG, FANG, HES, MRO, MUR, PXD, XEC, HFC, MPC, PSXBasic Materials:LYB, EXP, MLM, CF, MOS, ESI, NEU, NUE, RS, SON, IPReal Estate:BXP, HIW, UDR, KIM, NNN, WRI, VNO, JBGS, RYN Source: Fundstrat, Bloomberg(*) Please note that the stocks rated OW on this list meet the requirements of our investment theme as of the publication date. We do not monitor this list day by day. A stock taken off this list means it no longer meets our investment criteria, but not necessarily that it is neutral rated or should be sold. Please consult your financial advisor to discuss your risk tolerance and other factors that characterize your unique investment profile. ADDENDUM: We are attaching the stock lists for our 3 portfolios:We get several requests to give the updated list for our stock portfolios.  We are including the links here: - Granny Shots  -->       core stocks, based on 6 thematic/tactical portfolios- Trifecta epicenter  --> based on the convergence of Quant (tireless Ken), Rauscher (Global strategy), Technicals- Violence in USA --> companies that are involved in some aspect of home or personal security. We are not recommending these stocks, but rather, bringing these stocks to your attention. Granny Shots:Full stock list here --> Click hereTickers: AAPL, CSCO, INTC, MXIM, NVDA, EBAY, KLAC, GRMN, GOOG, MNST, MSFT, AMZN, QCOM, TSLA, PYPL, AXP, BF/B, PM, XLNX, TGT, PG, XOM, VLO, GL, RF, ATVI, BBY, GE, AMAT, LRCX, MU, HPQ Trifecta Epicenter (*):Full stock list here --> Click hereTickers: AN, GM, F, GRMN, LEG, TPX, TOL, NWL, MAT, PII, RL, MGM, HLT, MAR, NCLH, RCL, WH, TNL, SIX, DRI, SBUX, FL, GPS, KSS, LB, VFC, FITB, WTFC, ASB, BOH, FHN, FNB, PB, PBCT, RF, STL, TFC, WBS, PNFP, PACW, SBNY, NYCB, MTG, EVR, GS, IBKR, VIRT, BK, STT, SYF, BHF, AGCO, OC, ACM, WAB, EMR, GNRC, NVT, CSL, GE, IEX, PNR, CFX, DOV, MIDD, SNA, XYL, FLS, EAF, TTC, ITT, ALK, DAL, JBLU, LUV, MIC, KEX, UNP, JBHT, R, UBER, UHAL, LSTR, MAN, XOM, HP, BKR, HAL, NOV, SLB, COP, EOG, FANG, HES, MRO, MUR, PXD, XEC, HFC, MPC, PSX, LYB, EXP, MLM, CF, MOS, ESI, NEU, NUE, RS, SON, IP, BXP, HIW, UDR, KIM, NNN, WRI, VNO, JBGS, RYNViolence in USA:Full stock list here --> Click here (*) Please note that the stocks rated OW on this list meet the requirements of our investment theme as of the publication date. We do not monitor this list day by day. A stock taken off this list means it no longer meets our investment criteria, but not necessarily that it is neutral rated or should be sold. Please consult your financial advisor to discuss your risk tolerance and other factors that characterize your unique investment profile. POINT 1: Daily COVID-19 cases 42,769, -6,095 vs 7D ago... The decline in daily cases resumes..._____________________________Current Trends -- COVID-19 cases: - Daily cases    42,769 vs 48,864 7D ago, down -6,095- 7D positivity rate   4.9% vs 5.7% 7D ago- Hospitalized patients   46,738, down -16% vs 7D ago- Daily deaths    1,996, up +5.4% vs 7D ago_____________________________- The latest COVID-19 daily cases came in at 42,769, down -6,095 vs 7D ago.  - After being positive for three days last week, the 7D delta in daily cases has turned negative again. This shows the rise in daily cases last week could just be the results of the distortion of test/case data due to the cold snap.- Overall, a negative 7D delta is good news as the cases are still falling.  Source: COVID-19 Tracking Project  and Fundstrat7D delta in daily cases turns negative for 4 consecutive days of declines = hopeful sign? After being positive for three days last week, the 7D delta in daily cases has turned negative again. This is good news - it shows the rise in daily cases last week could just be the results of the distortion of test/case data due to the cold snap and that the daily cases in the US are still falling.    Source: COVID-19 Tracking and Fundstrat  US hospitalization still rolling over ... and even US deaths seem to be rolling over... Below we show the aggregate patients who are currently hospitalized due to COVID. It has fallen significantly from the wave 3 peak. Source: COVID Tracking Project and Fundstrat Source: COVID Tracking Project and Fundstrat Source: COVID-19 Tracking and Fundstrat   Source: COVID-19 Tracking and Fundstrat   POINT 2: VACCINE: 9 states (+2 vs Friday) near ~60% infected + vaccinated_____________________________Current Trends -- Vaccinations: Vaccinations ramping steadily- avg 1.7 million this past week vs 1.8 million last week- overall, 7.4% have 2-doses, 14.9% 1-dose_____________________________Vaccination frontier update --> 9 states > 60% combined penetration (vaccines + infections)Below we sorted the states by the combined penetration (vaccinations + infections).  As we commented in the past, the key figure is the combined value >60%, which is presumably near herd immunity.  That is, the combined value of infections + vaccinations as % population > 60%.- Currently, ND + SD + RI + AZ + OK + UT + TN + NM + NE are basically all at this level- So slowly, the US is getting to that threshold of presumable herd immunity Source: CDC, COVID Tracking Project and FundstratThere was a total of 2,419,397 doses administered today, up from 1,794,414 7D ago. Overall, the pace is steadily rising, as evidenced by the 7D moving average (see blue line). Source: CDC, COVID-19 Tracking Project and Fundstrat ~43% of the US has seen 1-dose penetration >15%... still not wide geographyTo better illustrate the actual footprint of the US vaccination effort, we have a time series showing the percent of the US with 2-doses covering at least 5% (and 10%) of its residents, displayed as the orange line on the chart. Currently, all US states have seen 5% of their residents with 2-doses administered.   However, when looking at the percentage of the US with 2-doses covering at least 10% of its residents, this figure is only 2%.- While all US states have seen vaccine penetration >10%, 43% of them have seen 1 dose penetration >15%. Not a lot of geography.- All of the US has at least 5% of its residents with the full 2 doses, However, only 2% of US has 2-dose vaccinated >10%- This is still a small figure (5%/10% of residents with 2 doses) but this figure is rising sharply now- The takeaway is that the vaccination efforts are unlikely to be having much of an effect on case figures, currently Source: CDC, COVID-19 Tracking Project and Fundstrat This is the state by state data below, showing information for states with one dose and for those with two doses. Source: CDC, COVID-19 Tracking Project and Fundstrat The ratio of vaccinations/ daily confirmed cases is generally trending higher (red line is 7D moving avg) and this is the most encouraging statistic. - the 7D moving average is about ~30 for the past few days- this means 30 vaccines dosed for every 1 confirmed caseThis figure is rising nicely and likely surges in the coming weeks Source: CDC, COVID-19 Tracking Project and FundstratIn total, about 49 million Americans have received at least 1 dose of a vaccine.  This is a good pace and as we noted previously, implies 30% of the population by April.   Source: CDC and FundstratPOINT 3: Case trends in these 5 states certainly seems to argue in favor of herd immunityWatch those states with >60% combined infections + vaccinations... For some time, we have pointed out how important it is to watch states with combined vaccinations + infections >60%.  For a long time, it was just North Dakota and South Dakota.  The reason being that if there is something akin to herd immunity, the case trends in these states should become extremely favorable. Per data by tireless Ken, there are now 5 states where the combined figure is solidly >60%:- South Dakota    +72%- North Dakota    +71%- Rhode Island     +66%- Arizona              +62%- Oklahoma         +61%So, given the continuous vaccination and improving rate, more states are crossing over 60%. Source: CDC, COVID Tracking Project and FundstratUtter collapse in daily cases taking place in these 5 states... The daily case figures are showing an utter collapse of COVID in these states.  Take a look below at the 7D moving average:- South Dakota    -89%- North Dakota     -95%- Rhode Island     -81%- Arizona              -87%- Oklahoma         -83%Recall how these states were suffering catastrophic hospitalization and deaths and soaring case figures.  But as vaccination penetration has surged, cases are collapsing. - Consider this, if the USA figures matched the improvement of North Dakota, the US would only be reporting 15,000 cases per day- Get the picture?  If the vaccination efforts remain effective, we could see dramatic improvements in coming weeks For those wondering how we get these figures, this is the table compiled by our data science team. Source: CDC, COVID Tracking Project and Fundstrat

COVID-19 UPDATE: 3 Positive COVID-19 developments over the weekend. Equities --> Key driver is strengthening economy --> New week. New month --> Risk-reward still positive for stocks

THIS MESSAGE IS SENT SOLELY TO CLIENTS OF FUNDSTRAT GLOBAL ADVISORS COVID-19 remains a global crisis and we realize that many people need to keep up with COVID-19 developments, particularly since we are moving into the more critical stage (restart economy), so feel free to share our commentary to anyone who has interest.  ***COVID-19 Chartbook attached*** We are shifting to a 4-day a week publication schedule: - Sunday eve /  Monday am - Monday eve / Tue am - Tue eve /        Wed am - SKIP WED - Thu eve /         Fri amSTRATEGY: Equities post largest 1D % gain since Nov election, while VIX falls + bonds rally = boomUS daily cases are falling again and on track for sub-40,000 this week... yay It looks like the downturn in US COVID-19 cases is resuming.  There was a mini-scare last week as cases turned up, but our lead data scientist, tireless Ken, noted that the cold weather likely artificially suppressed testing and the surge last week was merely a true up -- looks like he was correct.  The downturn in cases resumes. - tracking for sub 40,000 this week - tracking for sub 25,000 mid-March - if USA matches 5 states with something akin to herd immunity cases <15,000 by end of March Whoa. Source: COVID-19 Tracking Project  and FundstratWatch those states with >60% combined infections + vaccinations... For some time, we have pointed how important it is to watch states with combined vaccinations + infections >60%.  For a long time, it was just North Dakota and South Dakota.  The reason being that if there is something akin to herd immunity, the case trends in these states should become extremely favorable. Per data by tireless Ken, there are now 5 states where the combined figure is solidly >60%: - South Dakota    +72% - North Dakota    +71% - Rhode Island     +66% - Arizona              +62% - Oklahoma         +61% So, given the continuous vaccination and improving rate, more states are crossing over 60%. Source: CDC, COVID Tracking Project and FundstratUtter collapse in daily cases taking place in these 5 states... The daily case figures are showing an utter collapse of COVID in these states.  Take a look below at the 7D moving average: - South Dakota    -89% - North Dakota     -95% - Rhode Island     -81% - Arizona              -87% - Oklahoma         -83% Recall how these states were suffering catastrophic hospitalization and deaths and soaring case figures.  But as vaccination penetration has surged, cases are collapsing.  - Consider this, if the USA figures matched the improvement of North Dakota, the US would only be reporting 15,000 cases per day - Get the picture?  If the vaccination efforts remain effective, we could see dramatic improvements in coming weeksSTRATEGY: Equities post largest 1D % gain since November 2020 elections and prior to that... March 2020 bottom... Equities posted staggering gains on Monday: - DJIA                      +1.98% - S&P 500                +2.38% - Nasdaq                 +3.00% - Russell 2000         +3.60% - Russell Microcap  +4.80% So, the rally was strong across the board, but particularly strong for riskier equities -- a classic risk-on sign.  But there were multiple reasons to respect these gains: - equities posted largest 1D gain since Nov 3, 2020 (below) - VIX -16% to 23, down -4.6 and -26% from the 31 on 2/25/2021 - 10-yr interest rates backing off from 1.6% on 2/25/2021 - US economic data was very good, Feb ISM 60.8 vs 58.7 in Jan, construction spending +1.7% MoM So, this was not necessarily a dead-cat bounce.  In fact, take a look at the chart below.  We have only seen similar 1D % gains twice in the past year.  There was a cluster after: - Nov 3, 2020 elections, the start of an 18% rally - March 2020 bottom, the start of a +50% rally Hmmm.... so in the past year, after an extended sell-off, a major 1D price gain, coupled with strong positive market breadth is a signal of a rally.  This has been the case and, in our view, a decent framework for what to expect.  In other words, we think this signals further gains ahead - potentially strong gains. Source: Fundstrat and BloombergBond VIX last week also signaled an equity bottom was imminent... Last Thursday evening (Friday AM), our data science team pointed out that the near record surge in bond volatility (CBOE Bond VIX) was the 4th such spike in the past decade. And importantly, the 3 prior times of such a Bond VIX spike, where the rate of change (ROC) surged like it did, have been signs of a contemporaneous stock market low. We highlighted the 4 instances where the Bond VIX spiked + ROC soared >20: - June 24, 2013 - October 15, 2014 - March 19, 2020 Yes, 3 of 3 times previously, it was a major stock market bottom.  Nearly to the day.  Although on March 19th, it was 1-day before the bottom. Source: Fundstrat and Bloomberg This is what we showed last week, for the 3 precedent instances: - June 24, 2013, S&P 500 bottomed to the day - October 15, 2014, S&P 500 bottomed to the day - March 19, 2020,  S&P 500 bottomed to the day Notice a pattern here? And now it looks like this 4th instance was also the local bottom. Source: Fundstrat and BloombergSTRATEGY: Fundstrat Global Portfolio Strategist, Brian Rauscher, upgrades view on Energy... affirming Energy MUST BE OWNED Our Head of Global Portfolio Strategy, Brian Rauscher, has raised his outlook for Energy to Outperform - low from Neutral.  Brian, formerly the investment strategist at hedge fund Fortress Investments, manages a proven sector selection and stock selection model.  Many of our clients use it profitably.  And over the past few months, his model has advocated a shift towards an overweight in Energy: - foremost, his 8-panel model is no longer negative on Energy - additionally, the macro backdrop is stronger - Rauscher's model tracks global EPS and sales revisions very closely Hence, the fact that his model is turning favorable on Energy lends further fundamental credibility to Energy's strength.  While I don't want to speak for his model, rate of change is what is key.  And as legendary investor Tom Luddy, formerly vice chairman of JPMorgan, famously says: - less bad, is positive change, hence less bad is good That is exactly what supports, in our view, our continued confidence in the upside for Energy stocks.  Recall, based upon $60 crude, XLE and OIH, the proxies for Energy and Oilfield services, has 40% and 90% upside from current levels.  Thus, we urge clients to overweight this sector, in a BIG WAY. Source: FundstratSTRATEGY: Rationale for why investors need to increase their exposure to Epicenter... When looking at this positioning data, one can really get the sense that Energy is a completely orphaned sector.  Hence, the rise in Energy stocks, we believe, is eventually going to create FOMO. We continue to urge investors to increase their exposure to Epicenter and reduce Growth. One thing to keep in mind is that as the economy re-opens, investors and customers are going to be living a very different experience.  Consider some future anecdotes we might see by Summer 2021:What will be thinking? - Theme parks are booming, I am going to buy Netflix? Nope - People are back at the gym, I am going to buy Peloton? Nope - I am taking my first trip in a year, I am going to buy Zoom? Nope So you can see, there will be a shift in the mindset of both customers and investors as we move through mid-year and it will show up as consumer wallet change and in equity investor decisions. - Notably, take note below.  - Energy is up 31% YTD, yet hardly anyone is talking about Energy Source: Fundstrat and BloombergSTRATEGY: Epicenter Trifecta List 121 stocks The case for being Cyclically-tilted is strengthening: - Vaccine rollout set to accelerate - US cases collapsing - US economy set to re-open - US corporates reset cost structures = strong operating leverage - US credit markets strong = cost of capital falling Below is our updated Trifecta epicenter stock list. These are the stocks which were hit the hardest by the pandemic and have the greatest operating leverage to a re-opening.  And we like the earnings upside in these stocks, because of the massive cost reset.  The stocks are based on positive views coming from the trifecta of: (i) Quant (tireless Ken), (ii) Global Portfolio Strategy (Brian Rauscher, aka Rocky) and (iii) Technicals.  Consumer Discretionary: AN, GM, F, GRMN, LEG, TPX, TOL, NWL, MAT, PII, RL, MGM, HLT, MAR, NCLH, RCL, WH, TNL, SIX, DRI, SBUX, FL, GPS, KSS, LB, VFCFinancials: FITB, WTFC, ASB, BOH, FHN, FNB, PB, PBCT, RF, STL, TFC, WBS, PNFP, PACW, SBNY, NYCB, MTG, EVR, GS, IBKR, VIRT, BK, STT, SYF, BHFIndustrials: AGCO, OC, ACM, WAB, EMR, GNRC, NVT, CSL, GE, IEX, PNR, CFX, DOV, MIDD, SNA, XYL, FLS, EAF, TTC, ITT, ALK, DAL, JBLU, LUV, MIC, KEX, UNP, JBHT, R, UBER, UHAL, LSTR, MANEnergy: XOM, HP, BKR, HAL, NOV, SLB, COP, EOG, FANG, HES, MRO, MUR, PXD, XEC, HFC, MPC, PSXBasic Materials: LYB, EXP, MLM, CF, MOS, ESI, NEU, NUE, RS, SON, IPReal Estate: BXP, HIW, UDR, KIM, NNN, WRI, VNO, JBGS, RYN Source: Fundstrat, BloombergADDENDUM: We are attaching the stock lists for our 3 portfolios: We get several requests to give the updated list for our stock portfolios.  We are including the links here: - Granny Shots  -->       core stocks, based on 6 thematic/tactical portfolios - Trifecta epicenter  --> based on convergence of Quant (tireless Ken), Rauscher (Global strategy), Technicals - Violence in USA -->    companies that are involved in some aspect of home or personal security. We are not recommending these stocks, but rather, bringing these stocks to your attention. Granny Shots: Full stock list here --> Click here Tickers: AAPL, CSCO, INTC, MXIM, NVDA, EBAY, KLAC, GRMN, GOOG, MNST, MSFT, AMZN, QCOM, TSLA, PYPL, AXP, BF/B, PM, XLNX, TGT, PG, XOM, VLO, GL, RF, ATVI, BBY, GE, AMAT, LRCX, MU, HPQ Trifecta Epicenter: Full stock list here  --> Click here Tickers: AN, GM, F, GRMN, LEG, TPX, TOL, NWL, MAT, PII, RL, MGM, HLT, MAR, NCLH, RCL, WH, TNL, SIX, DRI, SBUX, FL, GPS, KSS, LB, VFC, FITB, WTFC, ASB, BOH, FHN, FNB, PB, PBCT, RF, STL, TFC, WBS, PNFP, PACW, SBNY, NYCB, MTG, EVR, GS, IBKR, VIRT, BK, STT, SYF, BHF, AGCO, OC, ACM, WAB, EMR, GNRC, NVT, CSL, GE, IEX, PNR, CFX, DOV, MIDD, SNA, XYL, FLS, EAF, TTC, ITT, ALK, DAL, JBLU, LUV, MIC, KEX, UNP, JBHT, R, UBER, UHAL, LSTR, MAN, XOM, HP, BKR, HAL, NOV, SLB, COP, EOG, FANG, HES, MRO, MUR, PXD, XEC, HFC, MPC, PSX, LYB, EXP, MLM, CF, MOS, ESI, NEU, NUE, RS, SON, IP, BXP, HIW, UDR, KIM, NNN, WRI, VNO, JBGS, RYN Violence in USA: Full stock list here  --> Click herePOINT 1: Daily COVID-19 cases 42,769, -6,095 vs 7D ago... The decline in daily cases resumes... _____________________________Current Trends -- COVID-19 cases:  - Daily cases    42,769 vs 48,864 7D ago, down -6,095 - 7D positivity rate   4.9% vs 5.7% 7D ago - Hospitalized patients   46,738, down -16% vs 7D ago - Daily deaths    1,996, up +5.4% vs 7D ago _____________________________ - The latest COVID-19 daily cases came in at 42,769, down -6,095 vs 7D ago.   - After being positive for three days last week, the 7D delta in daily cases has turned negative again. This shows the rise in daily cases last week could just be the results of the distortion of test/case data due to the cold snap. - Overall, a negative 7D delta is good news as the cases are still falling.  Source: COVID-19 Tracking Project  and Fundstrat7D delta in daily cases turns negative for 4 consecutive days of declines = hopeful sign? After being positive for three days last week, the 7D delta in daily cases has turned negative again. This is good news - it shows the rise in daily cases last week could just be the results of the distortion of test/case data due to the cold snap and that the daily cases in the US are still falling.      Source: COVID-19 Tracking and Fundstrat  US hospitalization still rolling over ... and even US deaths seem to be rolling over... Below we show the aggregate patients who are currently hospitalized due to COVID. It has fallen significantly from the wave 3 peak. Source: COVID Tracking Project and Fundstrat Source: COVID Tracking Project and Fundstrat Source: COVID-19 Tracking and Fundstrat    Source: COVID-19 Tracking and Fundstrat    POINT 2: VACCINE: 9 states (+2 vs Friday) near ~60% infected + vaccinated _____________________________Current Trends -- Vaccinations:  Vaccinations ramping steadily - avg 1.7 million this past week vs 1.8 million last week - overall, 7.4% have 2-doses, 14.9% 1-dose _____________________________Vaccination frontier update --> 9 states > 60% combined penetration (vaccines + infections) Below we sorted the states by the combined penetration (vaccinations + infections).  As we commented in the past, the key figure is the combined value >60%, which is presumably near herd immunity.  That is, the combined value of infections + vaccinations as % population > 60%. - Currently, ND + SD + RI + AZ + OK + UT + TN + NM + NE are basically all at this level - So slowly, the US is getting to that threshold of presumable herd immunity Source: CDC, COVID Tracking Project and Fundstrat There was a total of 2,419,397 doses administered today, up from 1,794,414 7D ago. Overall, the pace is steadily rising, as evidenced by the 7D moving average (see blue line). Source: CDC, COVID-19 Tracking Project and Fundstrat ~43% of the US has seen 1-dose penetration >15%... still not wide geography To better illustrate the actual footprint of the US vaccination effort, we have a time series showing the percent of the US with 2-doses covering at least 5% (and 10%) of its residents, displayed as the orange line on the chart. Currently, all US states have seen 5% of their residents with 2-doses administered.   However, when looking at the percentage of the US with 2-doses covering at least 10% of its residents, this figure is only 2%. - While all US states have seen vaccine penetration >10%, 43% of them have seen 1 dose penetration >15%. Not a lot of geography. - All of the US has at least 5% of its residents with the full 2 doses, However, only 2% of US has 2-dose vaccinated >10% - This is still a small figure (5%/10% of residents with 2 doses) but this figure is rising sharply now - The takeaway is that the vaccination efforts are unlikely to be having much of an effect on case figures, currently Source: CDC, COVID-19 Tracking Project and Fundstrat  This is the state by state data below, showing information for states with one dose and for those with two doses. Source: CDC, COVID-19 Tracking Project and Fundstrat  The ratio of vaccinations/ daily confirmed cases is generally trending higher (red line is 7D moving avg) and this is the most encouraging statistic.  - the 7D moving average is about ~30 for the past few days - this means 30 vaccines dosed for every 1 confirmed case This figure is rising nicely and likely surges in the coming weeks Source: CDC, COVID-19 Tracking Project and Fundstrat In total, about 49 million Americans have received at least 1 dose of a vaccine.  This is a good pace and as we noted previously, implies 30% of the population by April.   Source: CDC and FundstratPOINT 3: Case trends in these 5 states certainly seems to argue in favor of herd immunityWatch those states with >60% combined infections + vaccinations... For some time, we have pointed out how important it is to watch states with combined vaccinations + infections >60%.  For a long time, it was just North Dakota and South Dakota.  The reason being that if there is something akin to herd immunity, the case trends in these states should become extremely favorable. Per data by tireless Ken, there are now 5 states where the combined figure is solidly >60%: - South Dakota    +72% - North Dakota    +71% - Rhode Island     +66% - Arizona              +62% - Oklahoma         +61% So, given the continuous vaccination and improving rate, more states are crossing over 60%. Source: CDC, COVID Tracking Project and FundstratUtter collapse in daily cases taking place in these 5 states... The daily case figures are showing an utter collapse of COVID in these states.  Take a look below at the 7D moving average: - South Dakota    -89% - North Dakota     -95% - Rhode Island     -81% - Arizona              -87% - Oklahoma         -83% Recall how these states were suffering catastrophic hospitalization and deaths and soaring case figures.  But as vaccination penetration has surged, cases are collapsing.  - Consider this, if the USA figures matched the improvement of North Dakota, the US would only be reporting 15,000 cases per day - Get the picture?  If the vaccination efforts remain effective, we could see dramatic improvements in coming weeks For those wondering how we get these figures, this is the table compiled by our data science team. Source: CDC, COVID Tracking Project and Fundstrat For further information, please contact sales. Fundstrat Global Advisors sales@fundstrat. com 212-293-7140Bloomberg: RESP FSGA <>To unsubscribe, please contact us. Analyst Certification: Thomas J. Lee, the research analyst denoted by an “AC” on the cover of this report, hereby certifies that all of the views expressed in this report accurately reflect his personal views, which have not been influenced by considerations of the firm’s business or client relationships. Neither I, nor a member of my household is an officer, director, or advisory board member of the issuer(s) or has another significant affiliation with the issuer(s) that is/are the subject of this research report. There is a possibility that we will from time to time have long or short positions in, and buy or sell, the securities or derivatives, if any, referred to in this research. This research is for the clients of Fundstrat Global Advisors only and may contain information that is privileged, confidential, and/or exempt from disclosure under applicable law. If you are not the intended recipient, you are hereby notified that any disclosure, copying, distribution, or use of the information contained herein is strictly prohibited. Fundstrat does not have the same conflicts that traditional sell-side research organizations have because Fundstrat (1) does not conduct any investment banking activities, (2) does not manage any investment funds, and (3) our clients are institutional investors only. Although this email and any associated attachments are believed to be free of any virus or other defect, it is the responsibility of the recipient to ensure that it is virus-free, and Fundstrat Global Advisors does not accept any responsibility for loss or damage arising in any way from its use.  If you are not the intended recipient and/or have received this email in error, please immediately contact the sender and destroy the email in its entirety. For further disclosures, please click the link above to access the full note.

COVID-19 UPDATE: Daily cases broke the 42-day trend (downwards), 4 possible reasons. Key, Interest volatility surged in a way not seen since March 19, 2020...

Click HERE to access the FSInsight COVID-19 Daily Chartbook. We are shifting to a 4-day a week publication schedule: MondayTuesdayWednesdaySKIP THURSDAYFriday STRATEGY: Interest volatility surged in a way not seen since March 19, 2020... wut? Progress on COVID-19 daily case trends has stalled in the last 3 days... not entirely clear whyBelow is a summary of current COVID-19 case trends, as we end this fourth week in February.    Current Trends -- COVID-19 cases: - Daily cases    68,793 vs 63,311 7D ago, up +5,482- 7D positivity rate   5.5% vs 6.0% 7D ago- Hospitalized patients   52,669, down -16% vs 7D ago- Daily deaths    2,106, up +6.8% vs 7D agoIt seems like daily cases have turned up in the past 3 days (vs 7D  ago).  This is after 42 consecutive days of improvements.  Foremost, we are curious why this is happening, and a few thoughts have come to mind:- some schools in the US were on Spring break, so did travel lead to more cross-interaction?- are the more transmissible variants gaining ground?- weather has been quite volatile, did this impact immune systems?- were disruptions last week leading to delays in reporting so we are just seeing a true-up? See, there are multiple reasons to explain why cases could be rising this week.  And so I guess we need to hold off on judgment for now.  But this also means that the trajectory for sub-25,000 cases could be delayed.  I am not entirely negative, because we also know vaccine progress and penetration are moving forward.  - in fact, in Alaska, where >20% of residents have received at least 1-dose and that state is seeing a meaningful downturn in cases.- so, it makes sense to hold off on thinking a mini-wave 4 is starting.    Source: COVID-19 Tracking Project  and Fundstrat  Source: COVID-19 Tracking and Fundstrat  VACCINE: 7 States have now reached point ~60% combined vaccinations + infections... At the start of this week, we pointed out there 4 states where combined vaccinations + infections ~60%, the level that herd immunity might be considered:Start of the week, 4 states: - South Dakota- North Dakota- Rhode Island- ArizonaEnd of the week, +3 states:- Oklahoma- Utah- TennesseeSo cumulatively and slowly, the US is seeing more states reach that combined level of vaccinations + infections approach what is seen as herd immunity. Source: Fundstrat, CDC, World in Data and COVID-19 Tracking ProjectSTRATEGY: Interest rate volatility (Bond VIX) surged in a way not seen since March 19, 2020... Equities suffered sizable losses on Thursday, reversing the recovery seen since Tuesday. Broadly, as equity indices have stalled, it has been a tale of two markets --> Epicenter stocks (+11% YTD) vs Growth/Defensives (+0% YTD). And the tension against Growth stocks seemed to come to a head this week.  Consider:- Interest rates moved to new cycle highs --> bad for Growth- SPACs fell after CCIV announced its Lucid Motors deal --> bad for Growth (SPACs popular with Growth investors)- FANG and mega-cap Tech reported great earnings but stocks did not rise --> Growth tired, bad for Growth- Gamestop surged, hurting long-short HF (see note yesterday) --> bad for Growth (more than value)So you can see how this week, the cumulative headwinds seem to have come to a head.  For reasons discussed below, particularly the surge in bond volatility, we think some of this is quite capitulatory using the words of Technical Strategists. Source: Fundstrat and BloombergSTRATEGY: Why interest volatility surge yesterday was notable -- the biggest spike in Bond VIX since March 19, 2020...A number of clients asked us what we thought of bond market volatility.  The absolute level of rates rose to the highest in more than a year, but perhaps the more notable movements in interest rate volatility.- the CBOE interest volatility index (or Bond VIX) surged yesterday, the 4th such spike since 2012- the 30-week rate of change (red line) soared to the second-highest level ever (see below)We highlighted the 4 instances where the Bond VIX spiked + ROC soared >20- June 24, 2013- October 15, 2014- March 19, 2020Obviously, the question we all ask is whether there is anything significant to these dates. Source: Fundstrat and BloombergS&P 500 seems to have established a meaningful local bottom after each of these instances... The S&P 500 price is shown below, along with the Bond VIX spikes highlighted.  We included the 3 precedent instances.- June 24, 2013, S&P 500 bottomed to the day- October 15, 2014, S&P 500 bottomed to the day- March 19, 2020,  S&P 500 bottomed to the dayNotice a pattern here?  Just because this happened 3 of 3 times, this does not mean it has to happen a 4th time. Source: Fundstrat and BloombergSTRATEGY: Epicenter sectors are up meaningfully in the past week, even as Growth is down sizably... Take a look at the sector returns over the past week.  The S&P 500 is down 2% over the past 5 trading days, losing 85 points.- Epicenter stocks are up +1% to +9% in that 5-day period- Epicenter adding +28 points- Growth is down -5% to -6%- Growth subtracting >90 pointsIn other words, the factors above and the dam breaking are hitting Growth stocks especially hard.  But they are not really hurting Cyclicals. Source: Fundstrat and BloombergThe latest BofA (Bank of America) Global Fund Manager Survey shows investors massively underweight Energy... Cyclicals aka Epicenter remain underweight in the latest BofA FMS.  Actually, more specifically and correctly, FMS shows BofA clients significantly underweight Energy:- it is 3rd most popular UW second to cash and bonds- yes, Energy is as much trash as cash And the FMS also shows that funds added to their underweight in Energy in the past month.  This shows that funds actually added to cash, but increased their underweights in Energy. STRATEGY: Rationale for why investors need to increase their exposure to Epicenter... When looking at this positioning data, one can really get the sense that Energy is a completely orphaned sector.  Hence, the rise in Energy stocks, we believe, is eventually going to create FOMO. We continue to urge investors to increase their exposure to Epicenter and reduce Growth. One thing to keep in mind is that as the economy re-opens, investors and customers are going to be living a very different experience.  Consider some future anecdotes we might see by Summer 2021:What will be thinking?- Theme parks are booming, I am going to buy Netflix? Nope- People are back at the gym, I am going to buy Peloton? Nope- I am taking my first trip in a year, I am going to buy Zoom? NopeSo you can see, there will be a shift in the mindset of both customers and investors are we move through mid-year and it will show up as consumer wallet change and in equity investor decisions.- Notably, take note below. - Energy is up 31% YTD, yet, hardly anyone is talking about Energy Source: Fundstrat and Bloomberg STRATEGY: Epicenter Trifecta List 121 stocks (*)The case for being Cyclically-tilted is strengthening:- Vaccine rollout set to accelerate- US cases collapsing- US economy set to re-open- US corporates reset cost structures = strong operating leverage- US credit markets strong = cost of capital fallingBelow is our updated Trifecta epicenter stock list. These are the stocks which were hit the hardest by the pandemic and have the greatest operating leverage to a re-opening.  And we like the earnings upside in these stocks, because of the massive cost reset.  The stocks are based on positive views coming from the trifecta of: (i) Quant (tireless Ken), (ii) Global Portfolio Strategy (Brian Rauscher, aka Rocky) and (iii) Technicals.  Consumer Discretionary:AN, GM, F, GRMN, LEG, TPX, TOL, NWL, MAT, PII, RL, MGM, HLT, MAR, NCLH, RCL, WH, TNL, SIX, DRI, SBUX, FL, GPS, KSS, LB, VFCFinancials:FITB, WTFC, ASB, BOH, FHN, FNB, PB, PBCT, RF, STL, TFC, WBS, PNFP, PACW, SBNY, NYCB, MTG, EVR, GS, IBKR, VIRT, BK, STT, SYF, BHFIndustrials:AGCO, OC, ACM, WAB, EMR, GNRC, NVT, CSL, GE, IEX, PNR, CFX, DOV, MIDD, SNA, XYL, FLS, EAF, TTC, ITT, ALK, DAL, JBLU, LUV, MIC, KEX, UNP, JBHT, R, UBER, UHAL, LSTR, MANEnergy:XOM, HP, BKR, HAL, NOV, SLB, COP, EOG, FANG, HES, MRO, MUR, PXD, XEC, HFC, MPC, PSXBasic Materials:LYB, EXP, MLM, CF, MOS, ESI, NEU, NUE, RS, SON, IPReal Estate:BXP, HIW, UDR, KIM, NNN, WRI, VNO, JBGS, RYN Source: Fundstrat, Bloomberg(*) Please note that the stocks rated OW on this list meet the requirements of our investment theme as of the publication date. We do not monitor this list day by day. A stock taken off this list means it no longer meets our investment criteria, but not necessarily that it is neutral rated or should be sold. Please consult your financial advisor to discuss your risk tolerance and other factors that characterize your unique investment profile. ADDENDUM: We are attaching the stock lists for our 3 portfolios:We get several requests to give the updated list for our stock portfolios.  We are including the links here: - Granny Shots  -->       core stocks, based on 6 thematic/tactical portfolios- Trifecta epicenter  --> based on the convergence of Quant (tireless Ken), Rauscher (Global strategy), Technicals- Violence in USA --> companies that are involved in some aspect of home or personal security. We are not recommending these stocks, but rather, bringing these stocks to your attention. Granny Shots:Full stock list here --> Click hereTickers: AAPL, CSCO, INTC, MXIM, NVDA, EBAY, KLAC, GRMN, GOOG, MNST, MSFT, AMZN, QCOM, TSLA, PYPL, AXP, BF/B, PM, XLNX, TGT, PG, XOM, VLO, GL, RF, ATVI, BBY, GE, AMAT, LRCX, MU, HPQ Trifecta Epicenter (*):Full stock list here --> Click hereTickers: AN, GM, F, GRMN, LEG, TPX, TOL, NWL, MAT, PII, RL, MGM, HLT, MAR, NCLH, RCL, WH, TNL, SIX, DRI, SBUX, FL, GPS, KSS, LB, VFC, FITB, WTFC, ASB, BOH, FHN, FNB, PB, PBCT, RF, STL, TFC, WBS, PNFP, PACW, SBNY, NYCB, MTG, EVR, GS, IBKR, VIRT, BK, STT, SYF, BHF, AGCO, OC, ACM, WAB, EMR, GNRC, NVT, CSL, GE, IEX, PNR, CFX, DOV, MIDD, SNA, XYL, FLS, EAF, TTC, ITT, ALK, DAL, JBLU, LUV, MIC, KEX, UNP, JBHT, R, UBER, UHAL, LSTR, MAN, XOM, HP, BKR, HAL, NOV, SLB, COP, EOG, FANG, HES, MRO, MUR, PXD, XEC, HFC, MPC, PSX, LYB, EXP, MLM, CF, MOS, ESI, NEU, NUE, RS, SON, IP, BXP, HIW, UDR, KIM, NNN, WRI, VNO, JBGS, RYNViolence in USA:Full stock list here --> Click here (*) Please note that the stocks rated OW on this list meet the requirements of our investment theme as of the publication date. We do not monitor this list day by day. A stock taken off this list means it no longer meets our investment criteria, but not necessarily that it is neutral rated or should be sold. Please consult your financial advisor to discuss your risk tolerance and other factors that characterize your unique investment profile. POINT 1: Daily COVID-19 cases 68,793, +5,482 vs 7D ago..._____________________________Current Trends -- COVID-19 cases: - Daily cases    68,793 vs 63,311 7D ago, up +5,482- 7D positivity rate   5.5% vs 6.0% 7D ago- Hospitalized patients   52,669, down -16% vs 7D ago- Daily deaths    2,106, up +6.8% vs 7D ago_____________________________The latest COVID-19 daily cases came in at 68,793, instead of declining, it is up 5,482 vs 7D ago.  The 7D delta in daily cases has turned positive in the past 3 days, after being negative for 42 days. Could this be a reversal? Maybe. Source: COVID-19 Tracking Project  and Fundstrat7D delta in daily cases turns positive in the past 3 days... The 7D delta turned positive after being negative for the past 42 days consecutively. The good news is the 7D delta in daily cases does not surge significantly. Compared to two weeks or three weeks ago, the daily cases are still way lower. But could this be a reversal in COVID situation? Maybe.    Source: COVID-19 Tracking and Fundstrat  US hospitalization still rolling over ... and even US deaths seem to be rolling over... Below we show the aggregate patients who are currently hospitalized due to COVID. It has fallen significantly from the wave 3 peak. Source: COVID Tracking Project and Fundstrat Source: COVID Tracking Project and Fundstrat Source: COVID-19 Tracking and Fundstrat  Source: COVID-19 Tracking and Fundstrat   POINT 2: VACCINE: 7 states near ~60% infected + vaccinated. _____________________________Current Trends -- Vaccinations: Vaccinations ramping steadily- avg 1.9 million this past week vs 1.5 million last week- overall, 6.5% have 2-doses, 13.8% 1-dose_____________________________Vaccination frontier update --> only ND + SD + RI + AZ> 60% combined penetration (vaccines + infections)Below we sorted the states by the combined penetration (vaccinations + infections).  As we commented in the past, the key figure is the combined value >60%, which is presumably near herd immunity.  That is, the combined value of infections + vaccinations as % population > 60%.- Currently, only ND + SD + RI + AZ + OK + UT + TN are basically all at this level- So slowly, the US is getting to that threshold of presumable herd immunity Source: CDC, COVID Tracking Project and FundstratThere was a total of 1,804,667 doses administered, up from 1,357,940 7D ago. Overall, the pace is steadily rising, as evidenced by the 7D moving average (see blue line). Source: CDC, COVID-19 Tracking Project and Fundstrat ~14% of the US has seen 1-dose penetration >15%... still not wide geographyTo better illustrate the actual footprint of the US vaccination effort, we have a time series showing the percent of the US with 2-doses covering at least 5% of its residents, displayed as the orange line on the chart.  This figure is 99.8% (orange line).   However, when looking at the percentage of the US with 2-doses covering at least 10% of its residents, this figure is only 1.5%.- While all US states have seen vaccine penetration >10%, only 13.5% of them have seen 1 dose penetration >15%. Not a lot of geography.- Now almost all of the US has at least 5% of its residents with the full 2 doses, However, only 1.5% of US has 2-dose vaccinated >10%- This is still a small figure (5%/10% of residents with 2 doses) but this figure is rising sharply now- the takeaway is the vaccination efforts are unlikely to be having much of an effect on case figures, currently Source: CDC, COVID-19 Tracking Project and Fundstrat This is the state by state data below, showing information for states with one dose and for those with two doses. Source: CDC, COVID-19 Tracking Project and Fundstrat The ratio of vaccinations/ daily confirmed cases is generally trending higher (red line is 7D moving avg) and this is the most encouraging statistic. - the 7D moving average is about ~30 for the past few days- this means 30 vaccines dosed for every 1 confirmed caseThis figure is rising nicely and likely surges in the coming weeks Source: CDC, COVID-19 Tracking Project and FundstratIn total, about 46 million Americans have received at least 1 dose of a vaccine.  This is a good pace and as we noted previously, implies 30% of the population by April.   Source: CDC and Fundstrat

FLASH INTRADAY: GME surge --> VIX surge --> de-grossing --> stocks go down

STRATEGY: GME surge --> VIX surge --> de-grossing --> stocks go downEquities are under intensifying pressure today, and investors are citing multiple factors including rising rates (10Y creeping up).  But in a way, we think today is actually a de-grossing event- GME shares surged late Wednesday (+100%) and are again surging +80% today- VIX has followed the price of GME shares very closely since mid-Jan (when GME went mental)Why?- GME might still a popular short among HF- surging GME, means VAR requires short-covering- going long VIX is not a bad proxy- rising VIX causes value-at-risk models to require hedge funds to de-gross, or reduce leverageHence, GME surge --> VIX surge --> de-grossing --> stocks go downOf course, this is merely an observation and may not be the actual mechanism.  But at a time when:- crowded longs like Technology, Stay-at-home, etc have been acting poorly. - crowded underweights/shorts like Energy/Epicenter are surgingIt is also not surprising to see GME create another wave of panic/ post-traumatic de-gross. Source: Fundstrat and BloombergSTRATEGY: Well, VIX surges are temporary equity headwinds, since economic momentum is strengthening... The surge in the VIX is not welcome and rising VIX is a headwind for stocks.  But do we see this as directionally signaling new lows?  Given how cautious our clients have been (not ebullient), coupled with many top callers, coupled with improving economic visibility, we think this will prove to be a rotational event:- emerging from this weakness is the continued resurgence of cyclical stocks aka Epicenter- crowded and tired longs in Growth are likely source of funds

FLASH INTRADAY: Energy FOMO --> Food for thought

STRATEGY: Energy Sector (GICS 1) is now up 32% YTDI am sending this intraday comment as I think it is becoming urgent for our clients to have some Energy exposure.  While the sector is puny (~2% S&P 500 weight), the rise in the sector YTD is now potentially creating performance issues, for those underweight Energy.- YTD Energy is up 32%- beating any other sector by a country mile Source: tireless Ken of Fundstrat and BloombergEnergy is a misunderstood sector, and in the coming week,  I will write a complete narrative on why the sector has a central role in the coming economic recovery.  It is a lot more than just simply people get on planes and drive on vacationOilfield services (ETF OIH as a proxy) is ridiculously cheap vs oil price nowBut there is also a comparative price gap between oil at $60 and where Energy equities trade.  Take a look at the comparative price of oil vs oilfield services stock (OIH ETF as a proxy), using data since 2009.- at $60 oil, OIH should be $530- it is about $200 now- at $80 oil, which is possible, OIH should be $720So you see, monster upside.I recommend at least taking a small market-weight position, but obviously, since Energy is one of our Top 3 sectors for 2021, we recommend a much larger overweight. Source: Fundstrat, Bloomberg

COVID-19 UPDATE: COVID-19 case reverse progress as 7D delta now positive = questionable. Technology and Healthcare are slowing leaking

Click HERE to access the FSInsight COVID-19 Daily Chartbook. We are shifting to a 4-day a week publication schedule: MondayTuesdayWednesdaySKIP THURSDAYFriday STRATEGY: Technology and Healthcare are slowing leakingThe improvement in daily cases halted, as daily cases 7D delta turned positive -- is this a reversal? or is this Texas? The 7D delta turned positive after being negative for the past 42 days consecutively. However, as we wrote previously, Texas case number was artificially low last week due to the lab closures caused by the cold snap. And the rise of daily cases could just be a true-up.- The 7D delta in daily cases for US is +3,376, while Texas, itself, is +4,248. Hence, without the distortion in Texas, 7D delta in daily cases for US would remain negative.   Source: COVID-19 Tracking ProjectSTRATEGY: Epicenter has been solid... but Tech/Healthcare continue to leak... At the open/early trading, we saw a mini-“flash crash” with S&P 500 and Nasdaq 100 quickly down greater than 2%. Contributing factors for the sell-off included multiple triggers: - building nervousness around the rising rates and the Fed testimony, - steady deterioration in Nasdaq/Growth stocks and the “gut punch” from drop in Churchill SPAC (CCIV)- overnight fall in Bitcoin (yup)But fortunately, both equities and VIX found some footing through the trading day.  In fact, this wobble in equities was quite telling:- As shown below, Epicenter sectors actually rose on Tuesday- But Tech and Healthcare were weakThe observation we have is that on days of market weakness, it is led by Technology and Healthcare to the downside.  But Epicenter sectors are rising.  This is the divergence.- Epicenter sectors have added 23 points in the past week, or rose from 2% to 6%- But Technology and Healthcare have been steadily bleeding STRATEGY:  7 reasons stocks are buy the dip even as the bond market is on edge with Fed Chair Powell set to speak... The larger story arc, in our view, is that equities have multiple positive supports and this constructive backdrop likely prevents a larger risk-off spillover.  In fact, this past week is evidence of this.  Despite the surge in the VIX and the rollover of technology stocks, the indices actually were flat and Epicenter stocks were positive. More specifically, we see 7 positive supports for stocks in the near-term:1. Washington is moving forward with passing a large fiscal relief package, and Treasury Sec. Yellen has made a forceful case for it2. Fed has been vocal in policy stance (last week's minutes affirmed) and Fed is patient3. US economy is re-opening and economic momentum is strong -- so strong, JPMorgan's Chief Economist, Bruce Kasman, says US V-shape recovery will soon surpass China.  Wow.4.  There remains a substantial perception gap between policymakers/media and COVID-19 realized data, and a closing of this gap is positive for risk assets.5.  Millennials are steadily allocating assets toward equities, and the surge in retail brokerage account openings is evidence of this.6.  Bonds are becoming less attractive total return vehicles as inflationary expectation are increasing, boosting the attractiveness of equities7.  VIX is steadily declining, and as we pointed out in our 2021 Outlook, periods of declining volatility historically lead to big equity gains, particularly for cyclicals. STRATEGY: Epicenter Trifecta List 121 stocks (*)The case for being Cyclically-tilted is strengthening:- Vaccine rollout set to accelerate- US cases collapsing- US economy set to re-open- US corporates reset cost structures = strong operating leverage- US credit markets strong = cost of capital fallingBelow is our updated Trifecta epicenter stock list. These are the stocks which were hit the hardest by the pandemic and have the greatest operating leverage to a re-opening.  And we like the earnings upside in these stocks, because of the massive cost reset.  The stocks are based on positive views coming from the trifecta of: (i) Quant (tireless Ken), (ii) Global Portfolio Strategy (Brian Rauscher, aka Rocky) and (iii) Technicals.  Consumer Discretionary:AN, GM, F, GRMN, LEG, TPX, TOL, NWL, MAT, PII, RL, MGM, HLT, MAR, NCLH, RCL, WH, TNL, SIX, DRI, SBUX, FL, GPS, KSS, LB, VFCFinancials:FITB, WTFC, ASB, BOH, FHN, FNB, PB, PBCT, RF, STL, TFC, WBS, PNFP, PACW, SBNY, NYCB, MTG, EVR, GS, IBKR, VIRT, BK, STT, SYF, BHFIndustrials:AGCO, OC, ACM, WAB, EMR, GNRC, NVT, CSL, GE, IEX, PNR, CFX, DOV, MIDD, SNA, XYL, FLS, EAF, TTC, ITT, ALK, DAL, JBLU, LUV, MIC, KEX, UNP, JBHT, R, UBER, UHAL, LSTR, MANEnergy:XOM, HP, BKR, HAL, NOV, SLB, COP, EOG, FANG, HES, MRO, MUR, PXD, XEC, HFC, MPC, PSXBasic Materials:LYB, EXP, MLM, CF, MOS, ESI, NEU, NUE, RS, SON, IPReal Estate:BXP, HIW, UDR, KIM, NNN, WRI, VNO, JBGS, RYN Source: Fundstrat, Bloomberg(*) Please note that the stocks rated OW on this list meet the requirements of our investment theme as of the publication date. We do not monitor this list day by day. A stock taken off this list means it no longer meets our investment criteria, but not necessarily that it is neutral rated or should be sold. Please consult your financial advisor to discuss your risk tolerance and other factors that characterize your unique investment profile. ADDENDUM: We are attaching the stock lists for our 3 portfolios:We get several requests to give the updated list for our stock portfolios.  We are including the links here: - Granny Shots  -->       core stocks, based on 6 thematic/tactical portfolios- Trifecta epicenter  --> based on the convergence of Quant (tireless Ken), Rauscher (Global strategy), Technicals- Violence in USA --> companies that are involved in some aspect of home or personal security. We are not recommending these stocks, but rather, bringing these stocks to your attention. Granny Shots:Full stock list here --> Click hereTickers: AAPL, CSCO, INTC, MXIM, NVDA, EBAY, KLAC, GRMN, GOOG, MNST, MSFT, AMZN, QCOM, TSLA, PYPL, AXP, BF/B, PM, XLNX, TGT, PG, XOM, VLO, GL, RF, ATVI, BBY, GE, AMAT, LRCX, MU, HPQ Trifecta Epicenter (*):Full stock list here --> Click hereTickers: AN, GM, F, GRMN, LEG, TPX, TOL, NWL, MAT, PII, RL, MGM, HLT, MAR, NCLH, RCL, WH, TNL, SIX, DRI, SBUX, FL, GPS, KSS, LB, VFC, FITB, WTFC, ASB, BOH, FHN, FNB, PB, PBCT, RF, STL, TFC, WBS, PNFP, PACW, SBNY, NYCB, MTG, EVR, GS, IBKR, VIRT, BK, STT, SYF, BHF, AGCO, OC, ACM, WAB, EMR, GNRC, NVT, CSL, GE, IEX, PNR, CFX, DOV, MIDD, SNA, XYL, FLS, EAF, TTC, ITT, ALK, DAL, JBLU, LUV, MIC, KEX, UNP, JBHT, R, UBER, UHAL, LSTR, MAN, XOM, HP, BKR, HAL, NOV, SLB, COP, EOG, FANG, HES, MRO, MUR, PXD, XEC, HFC, MPC, PSX, LYB, EXP, MLM, CF, MOS, ESI, NEU, NUE, RS, SON, IP, BXP, HIW, UDR, KIM, NNN, WRI, VNO, JBGS, RYNViolence in USA:Full stock list here --> Click here (*) Please note that the stocks rated OW on this list meet the requirements of our investment theme as of the publication date. We do not monitor this list day by day. A stock taken off this list means it no longer meets our investment criteria, but not necessarily that it is neutral rated or should be sold. Please consult your financial advisor to discuss your risk tolerance and other factors that characterize your unique investment profile. POINT 1: Daily COVID-19 cases 59,486, +3,376 vs 7D ago..._____________________________Current Trends -- COVID-19 cases: - Daily cases    59,486 vs 56,110 7D ago, up +3,376- 7D positivity rate   5.7% vs 6.3% 7D ago- Hospitalized patients   55,058, down -15% vs 7D ago- Daily deaths    2,016, down -8% vs 7D ago_____________________________The latest COVID-19 daily cases came in at 59,486, instead of declining, it is up 3,376 vs 7D ago.  The 7D delta in daily cases has turned positive Tuesday, after being negative for 42 days. However, this is primarily due to the data distortion in TX. Source: COVID-19 Tracking Project  and Fundstrat7D delta in daily cases turns positive due to the data distortion in Texas... The 7D delta turned positive after being negative for the past 42 days consecutively. However, as we wrote previously, Texas case number was artificially low last week due to the lab closures caused by the cold snap. And the rise of daily cases is just a true-up.- The 7D delta in daily cases for US is +3,376, while Texas, itself, is +4,248. Hence, without the distortion in Texas, 7D delta in daily cases for US would remain negative.   Source: COVID-19 Tracking and Fundstrat  US hospitalization still rolling over ... and even US deaths seem to be rolling over... Below we show the aggregate patients who are currently hospitalized due to COVID. It certainly seems to be rolling over = good sign. Source: COVID Tracking Project and Fundstrat Source: COVID Tracking Project and Fundstrat Source: COVID-19 Tracking and Fundstrat  Source: COVID-19 Tracking and Fundstrat   POINT 2: VACCINE: Pace vaccinations kind of stalling... 1.8mm vs 1.6mm (7D avgs)_____________________________Current Trends -- Vaccinations: Vaccinations ramping steadily- avg 1.8 million this past week vs 1.6 million last week- overall, 6.0% have 2-doses, 13.4% 1-dose_____________________________Vaccination frontier update --> only ND + SD + RI > 60% combined penetration (vaccines + infections)Below we sorted the states by the combined penetration (vaccinations + infections).  As we commented in the past, the key figure is the combined value >60%, which is presumably near herd immunity.  That is, the combined value of infections + vaccinations as % population > 60%.- Currently, only ND + SD + RI are at this level- nearly half of the states are approaching this, such as UT, AZ, TN, OK at >55%- So slowly, the US is getting to that threshold of presumable herd immunity Source: CDC, COVID Tracking Project and FundstratThere was a total of 853,143 doses administered. The stats 7D ago was distorted due to President's Day. Hence the data is not really comparable. However, the pace overall is steadily rising, as evidenced by the 7D moving average (see blue line). Source: CDC, COVID-19 Tracking Project and Fundstrat ~10% of the US has seen 1-dose penetration >15%... still not wide geographyTo better illustrate the actual footprint of the US vaccination effort, we have a time series showing the percent of the US with 2-doses covering at least 5% of its residents, displayed as the orange line on the chart.  This figure is 92% (orange line).   That means, while 6% of the US overall has received 2 doses, 92% of US states has US citizens with >5%. - While all US states have seen vaccine penetration >10%, only 10% of them have seen 1 dose penetration >15%. Not a lot of geography.- Now 92% of the US has at least 5% of its residents with the full 2 doses- This is still a small figure (5% of residents with 2 doses) but this figure is rising sharply now- the takeaway is the vaccination efforts are unlikely to be having much of an effect on case figures, currently Source: CDC, COVID-19 Tracking Project and Fundstrat This is the state by state data below, showing information for states with one dose and for those with two doses. Source: CDC, COVID-19 Tracking Project and Fundstrat The ratio of vaccinations/ daily confirmed cases is generally trending higher (red line is 7D moving avg) and this is the most encouraging statistic. - the 7D moving average is about ~25 for the past few days- this means 25 vaccines dosed for every 1 confirmed caseThis figure is rising nicely and likely surges in the coming weeks Source: CDC, COVID-19 Tracking Project and FundstratIn total, about 44 million Americans have received at least 1 dose of a vaccine.  This is a good pace and as we noted previously, implies 30% of the population by April.   Source: CDC and FundstratPOINT 3: >70% of COVID-19 infected suffer the loss of smellI am stating something obvious.  The sense of smell is one of our key senses and central to many aspects of our lives:- enjoyment --> food, places, perfume, etc- safety --> burning, smell dangers- social --> smell is way more important to our engagement with others socially In fact, people may not realize this, but nearly every person smells their hand after meeting someone. Yup, that is human instinct.  In fact, this NOVA article below discusses this.- it looks like it stems from our chemosignaling to acquire information about a person.- similar to how animals sniff each other, but far more polite Source: /wgbh/nova/article/you-probably-sniff-your-hand-after-shaking-someone-elses/COVID-19 is disrupting handshakes and also sense of smell... So COVID-19 is creating two avenues of disruption related to our use sense of smell:- >70% of COVID-19 sufferers lose the sense of smell- surprisingly large number lose it long term- not shaking hands deprives humans of key chemical signalingThis is why there will be a need to develop a few things:- proxy smell --> people need something to sniff danger, such as food burning, fires, chemicals- proxy for biochemical signaling --> are people who cannot smell going to have less social engagement due to the inability to smell others?I am just thinking out loud. More evidence of long-term loss of smell... There are more studies and anecdotes emerging of COVID-19 long-term loss of smell.  The NY Post article below talks about how some have not recovered their sense of smell, even after 12 months.  For those suffering, it is creating problems, including a loss of interest in eating (can't taste) and social anxiety (do they smell?).  And also, concerns because they cannot smell food burning, nor dangerous smells. Source: NY PostAnd I was surprised by this University of California Merced article noting that loss of smell happens to >70% of COVID-19 users. Source: /news/connection-between-covid-19-and-loss-smell-uncovered-research-team

FLASH INTRADAY: Is TICK -1400 signaling bottom? Anonymous Technician says TICK + TLT "green" = sign of capitulation

STRATEGY: Is TICK -1400 signaling bottom?  Anonymous Technician says TICK + TLT green = sign of capitulationThe market open today sure felt like a mini-flash crash with stocks universally gapping down big. The ostensible reasons are:- Fed speaking today and everyone worried about a rate eruption (rates surge)- Tech has been underperforming while Epicenter is rising, and this is an awkward rotationBut still, big selling at the open.I got this email from an anonymous technician, or AT.  As many know, our beloved Rob Sluymer, formerly head of TA, is now a client at RBC. See the comment below:- TICK -1400 is a potential sign of capitulation- TLT trading positive, opposite of rate eruption fear- VIX after surging to 27, is now basically flat STRATEGY: We are steady buyers as we see multiple supports for stocks... but stick with Epicenter... they are underowned... not crowded trades

FSInsight logo
150 East 52nd St, 3rd Floor, New York, NY 10022

Subscribe to our Free Weekly Report

An insitutional-grade report delivered to your inbox every week.

© 2021 FSInsight. All rights reserved. Developed by HANGAR115.

Illustrations by Karl Wimer.